This document discusses the state of the UK business lending market and alternative funding options for recruiters. While the UK employment market is strong, there is uncertainty in 2016. Bank lending to businesses has declined in recent years and overdrafts are still collapsing, despite some stabilization. This is an issue as working capital drives many small business financing needs. Alternative financing options for recruiters include invoice financing, short-term loans, revenue advances, and term loans, but recruiters often lack physical collateral. The document provides case studies of recruiters that have successfully used alternative financing like invoice financing and short-term loans to support growth. It encourages recruiters to explore alternative options through the Funding Options website.

1. MARKET 02/2016
Funding
Recruitment
Growth
Conrad Ford

2. Agenda
A strong market, but uncertain year ahead
The general state of UK business lending
Alternative funding options for recruiters

3. The UK now seeing record employment
2008
credit
crunch
Today
UK employment, millions
Sources: ONS, Adzuna
Annual salary growth, 2015

4. But huge uncertainty in the year ahead
“Bellwether for the
global economy
has crashed to its
lowest level ever”
“Ships are being
scrapped at
double the 1986
record rate”
Deja Vu? Across the pond Closer to home

5. Bank lending to firms collapsed over the
last few years; it’s now finally stabilising
fall in lending
to UK firms
£10
billion

6. Unfortunately, faster-growing
sectors like yours are worst hit
Traditional sectors High-growth sectors
YOU

7. The hidden story is that overdrafts
are still collapsing; this won’t change
“A report from Funding Options, the
online business finance supermarket,
has said the overdraft cull shows no
signs of abating”
“Twice as many SMEs in the North of
England have had their overdraft
facilities axed.. says business financial
comparison site Funding Options”

8. This is a huge issue, because working
capital drives most SME finance needs
The business need
Source: BIS
“Giving a small
business an overdraft
is like handing a
child a loaded gun”
said a leading
business banker”
The bank view(!)

9. So why don’t firms just go elsewhere?
usage levels of
alternative finance
10%~20%
30%~40%
firms using personal
credit cards
Dozens of finance
products, hundreds
of finance providers
“56% of SMEs unfamiliar with any
forms of alternative finance”
Sources: Cambridge University, AXA, FT

10. Alternatives to overdrafts
• Good if
you can
get
them
• Unattra
ctive for
banks
Invoice finance
• Factoring or discounting
• Unregulated market
Non-bank overdrafts
• New types of overdrafts
• Proactive monitoring
Business credit cards
• Tough qualifying criteria
• Limited scale of funds
Invoice finance a staple
for recruitment firms;
key considerations are
cost versus flexibility

11. Emergency or top-up funding
Short-term loans
• Terms of a few months
• Up to a month’s revenue
Sell an invoice
• Single large invoices
• Even purchase orders
Dozens of short-term
lenders, with diverse
criteria; challenge is
knowing where to look
Revenue advances
• Pay as a % of revenue
• Fixed cost of finance

12. Longer-term growth facilities
Term loans
• Typically 2-4 year terms
• Traditional underwriting
Structured bank loans
• Drawdown on milestones
• Focused on growth firms
Biggest challenge for
recruitment firms is they
lack physical security, in
a cyclical industry.
Structured direct loans
• Bespoke & low volume
• Warrants popular

13. Thinking outside the box: some recent
high-growth recruitment case studies
 Replaced bank with
flexible invoice finance.
 Unlocked personal
pension for growth.
Executive search,
doubling turnover
 Replaced bank with
flexible invoice finance.
 Fast short-term loan
over Xmas.
Midlands regional,
£2m-£3m turnover
Nationwide £5m+
high-growth turnover
 Kept existing bank
invoice finance.
 Took unsecured
~£200k term loan.

14. Need finance? Have a go: fundingoptions.com
“Professional,
straightforward, fast, friendly”
“Helpful, speedy
and respectful”

15. Closing thoughts, the uncertain year ahead
CUSTOMERSEXPERTS
“Helpful,
speedy and
respectful”
“Help SMEs to
get the finance
they need”
PRESS
“The online
business finance
supermarket”
GOVERNMENT
“Hundreds of jobs
either saved or
created”
In/ConradFord@FinanceConradFundingOptions.com