May 29, 2020
How Can Alternative Finance Support the Print Industry? See What Advice I Gave to the British Print Industry Federation
Earlier this month, I took part in a webinar hosted by the British Print Industry Federation (BPIF) to answer questions on what the alternative finance market can offer the industry, you can watch it here.
COVID-19 has made finance a hot topic for all sectors, especially as many companies have found that they don’t qualify for government-backed schemes such as the Coronavirus Business Interruption Loan.
The aim of the seminar, therefore, was to help members to understand the finance options available to them and how alternative finance could fit into their decision-making pathways, both during the pandemic and beyond.
The State of the Print Sector
First up, we had a look at how the sector is faring. According to BPIF’s Printing Outlook survey, the end of last year was particularly difficult for the industry.
Output and orders were disappointing, and Brexit was highlighted by over two-thirds of respondents as their number one business concern.
Furthermore, the amount of printed paper and boards had fallen during Q2 2019 compared to Q2 2018 and Q1 2019.
And it seems COVID-19 has compounded these issues. Charles Jarrold, CEO of BPIF explained that 12% of printers had ceased their operations and 73% had taken advantage of the government Job Retention Scheme.
He also said that 70% of respondents don’t expect demand for their services to return quickly, and the health and safety of employees returning to work was highlighted as a concern.
Most importantly, for this discussion, many didn’t like the idea of using debt as a solution to their challenges but accepted it was a viable option in difficult times.
Finance in the Print Business
So why is the print industry interested in alternative finance?
Traditionally, printers have two main credit lines; however, both have been put under strain by COVID-19.
With large B2B order books, invoice finance is a common source of credit. The second is asset finance. Most printers invest in cutting edge machines to ensure quality and efficiency during production. These machines can retain 80% of their value for up to 20 years, and there is a robust second-hand market for them, making them perfect to use as security.
However, with printers’ order books dwindling and their clients’ ability to pay having taken a hit, many lenders are less willing to extend finance using these traditional lines.
How Can Alternative Finance Help the Print Industry?
With traditional lines under pressure and government schemes not suitable for all businesses, the main aim of the webinar was to introduce BPIF members to new and potentially more flexible finance options.
The Q&A with myself and the rest of the panel was very detailed, and you can watch the full video here.
To summarise, we explained that alternative finance could be seen as a third option that assesses a company’s lending application using broader criteria more focused on the merits and financial position of the individual company. Alternative lenders will look at broader criteria. They will:
- Consider a wider range of security like commercial property or buy-to-let premises.
- Look at the company’s business proposition; how long it has been trading for, how the business is performing, whether its accounts have been well managed, etc.
- Review the director’s professional background and financial position.
- Place any adverse events like CCJs in context rather than refuse loans based on fixed criteria.
The result is that there is no one-size-fits-all deal when working with an alternative lender – every agreement is different, depending on the company’s situation.
My Advice: Be Clear, Be Honest
At Reparo, we offer loans from £25,000 to £1m and can work alongside larger asset finance loans; but to do this we need to understand a company, and that involves directors being completely honest with themselves and us about the situation their business is facing.
The first thing we ask any customer is what they want to achieve with this finance. They also need to be transparent with us about their costs, revenues and potential future challenges – and we expect them to have visibility of the financial situation of their main customers.
This honest appraisal helps the customer to consider if finance really is what they need to drive their business forward or if other solutions, such as restructuring, might better meet their aims.
During troubled times, having access to finance can mean the difference between success and failure. It’s therefore reassuring for hard-hit sectors like Print to know that there is a range of options available to them and that alternative finance is available when all other options have been exhausted.
We Can Help
At Reparo, we know that each business is unique; that’s why we focus on understanding your company and what lending is right for you. A huge benefit of working with us is speed: we can approve and payout loans in incredibly short timeframes – a couple of days in some cases.
Our team is always available to discuss your application, and we offer a rapid and flexible service. To discuss a loan of between £25,000 and £1m, please contact us at firstname.lastname@example.org or on 0161 451 5710.