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12 June 2012

Manufacturers’ loan solution


Manufacturing businesses have come up with an elegant solution to limited bank finance: lending directly to their small business customers.

LPM outsourcing, a service provider for the asset finance market, has reported that certain larger manufacturers are providing funding opportunities for the purchase of their goods for SME clients unable to get bank loans.

UK companies are currently sitting on a cash pile of £754bn – nearly half of the UK’s total gross domestic product, according to forecasting group The Item Club.

Unlocking this capital for customers has meant SMEs can now bypass the banks, said Ian Dennis of LPMO. “A lot of large corporate have spent the recession reducing debt and hoarding cash – so they have strong balance sheets while the banks don’t” he noted. “These manufacturers want to keep driving sales to their customers who, despite being perfectly good credits, just can’t get loans from their usual banks. It is a win-win situation. The big manufacturers get to make more sales and the smaller businesses can make essential investments in business assets that they wouldn’t otherwise be able to afford.”

Source: Financial Times June 2012



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*Article for guidance only. Professional advice should be obtained to ensure that all circumstances are assessed in providing a complete answer.