MarketInvoice coverage in City A.M. – Small financiers scramble to fill gap left by FSA-regulated lenders
Small financiers scramble to fill gap left by FSA-regulated lenders
BY JULIET SAMUEL
PUBLISHED 4TH MAY 2012
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SMALL-TIME finance companies are seeing explosive growth as banks are priced out of the market for helping small businesses to export their goods.
Trade Finance Partners (TFP), which extends credit to small exporters that includes firms supplying Pepsi, Argos and a Tanzanian hydro-electic project, has booked a profit in its first year of trading on a turnover of £12m.
Like other firms targeting small business financing – such as Bluehone Secured Assets, MarketInvoice and Funding Circle, TFP is tapping into pent-up demand due to a large gap in the market left by deleveraging banks, which have been hit by tightening capital rules.
Its commercial director, William Tebbit – son of the former cabinet minister Norman Tebbit and previously a banker at Seymour Pierce and WestLB – told City A.M. that all 18 of the firm’s current clients had been refused the financing they needed by banks. “These small businesses are the lifeblood of the economy and they are being starved of cash,” he said. He calls his model that of an “old-fashioned merchant bank” that extends credit to a small firm to get its goods made, and then sells them the goods for selling on to a large customer such as Argos or Pepsi.
Tebbit is critical of government initiatives like credit easing that try to make large banks lend more cheaply “because they will still lend at the same terms and conditions” and have no effect on the new regulations hitting lending.
By contrast, TFP is not FSA-regulated. “We seem to have a number of people in government who believe that if you say it is getting better they think that is all you have to do. It probably stems from never having had a job or run a business,” he said.