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XL Business Finance Blog » Blog Archive » Factoring and EFG Funding

Factoring and EFG Funding

We automatically assume that the high street banks are the best places to obtain funding via the Enterprise Finance Guarantee Scheme. In fact 90% of EFG funding is supplied by two¬†such banks. If for some reason your business doesn’t meet all of the banks criteria than it maybe possible to obtain EFG funding piggy backed on the back of a factoring facility.

EFG isn’t a right. Your business must meet all the banks normal lending criteria. If you tick all the boxes but there is a lack of security in a deal then that is when the EFG funding kicks into place. If you don’t meet the banks lending criteria then you wont get passed first base. Factoring and invoice discounting companies have very different lending criteria and just because you have been knocked back via the banks doesn’t mean you will do so by a factoring or invoice discounting company.

There are two main factoring companies offering EFG funding and they do things slightly different. One funder will use EFG to lend up to 100% of your debtor book. For a business with high levels of turnover this could amount to significant levels of dosh.

Another funder will advance an amount equivalent to any directors loans in the business up to a maximum of no more than 50% of the debtors advance.

Both companies as always have a slightly different perspective on things and so if you have directors loans in the business it may be worth a have discussions with both to see which one will provide the best funding solution.

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XL Business Finance Ltd is a privately owned and independent business financing company with established links to many of the UK's leading finance houses. XL Business Finance provides a viable alternative to high street banks that lack the flexibility and imagination to provide a solution to most business users requirements. XL Business Finance can provide a full range of business financing solutions and we ensure a high level of customer service and pride ourselves on quick decisions. Our independent status will ensure any offer of funding and asset finance leasing is best suited to our customer’s needs.

XL Business Finance, Eaton Place Business Centre, 114 Washway Road, Sale, Cheshire M33 7RF UK.

 

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