Factris: EU Banks to restrict lending to SMEsGo to the news page
A regulatory framework for banks will soon change across Europe
SMEs trying to secure loans from banks will suffer the most from these changes
70% of SMEs rely on bank loans, signalling trouble for millions of small businesses
Changes in regulations across the EU will create new problems on small and medium-sized enterprises (SMEs) in an already difficult lending environment. These changes, set to take effect by 2022, will increase funding costs for banks and will thus make loans subject to increased scrutiny. This, in turn, means fewer loans will be issued to SMEs - especially those whose creditworthiness is considered substandard. Moreover, to make a difficult situation worse, this same funding cost increase will also make financing from banks more expensive.
Cash flow is already a significant problem for SMEs across Europe. According to a recent survey conducted by the European Central Bank (ECB), roughly 1 in 10 SMEs struggle to secure financing. This same survey revealed how dependent SMEs are on banks: approximately 70% of SMEs rely on bank loans to finance their business, foreshadowing what a massive problem this will prove to be for smaller enterprises across Europe.
Given the critical situation that many SMEs will soon face, it’s clear that alternative sources of financing are needed as banks will no longer be an option for many small businesses. The fintech company Factris has taken note of this and is readying themselves to help finance SMEs.
“Banks can be a nightmare for SMEs,” says Brian Reaves, CEO of Factris. “It has always been hard to secure a loan if you’re a small business. These new regulation changes will only make it more important for SMEs to avail themselves of alternative financing options available to keep their business going. Alternative options like factoring will prove to be a lifesaver for many SMEs.”
Factoring is a financing method offered by Factris where unpaid invoices are purchased in order to provide capital to SMEs for a small fee.
Continues Reaves, “We’re happy to be part of the solution to the problems posed by banks that are unable to help small businesses.”
Factris closes series A round to increase reach
Factris has concluded a EUR 5M Series-A equity funding round led by AB Ventures, the corporate venture capital arm of the Arab Bank. Current investors participating in the round included Speedinvest and Optima Investments, along with high networth investors.
Factris and NN Investment Partners agree on European financing agreement
Factris has closed a new EUR 50m secured financing agreement with asset manager NN Investment Partners (NN IP). The facility will be used to provide financing to European SMEs via the purchase of their trade-related invoices.
What is factoring?
Alternative forms of financing, like factoring, have never been more important for your business. Learn how factoring works for your SME. Factoring (or invoice financing as it’s also known) is well known to many businesses.