3 working capital financing strategies to help grow your company

As an ambitious Irish SME, you’re probably trying to figure out how to make the most of working capital. Should you opt for a conservative growth approach or a more aggressive strategy to scale your business? And once you’ve decided on your approach, how will you finance additional working capital?

This article will run you through your options for working capital financing strategies as an Irish SME. We’ll also discuss in detail the different kinds of funding available to Irish SMEs, how Financefair can help, and some examples of working capital financing strategies for SaaS, ecommerce, and recruitment businesses. 

In this article:

What should my working capital financing strategy be?
What are your options for working capital financing?
Revenue based finance: capital that grows with you
Online business line of credit: only pay for the funding you use
Selective invoice financing: get an advance on your invoices, to alleviate a cash flow pinch
How to choose the best working capital financing facility for your company
Working capital financing strategy for a SAAS business
Working capital financing strategy for an ecommerce business
Working capital financing strategy for a recruitment business
Why choose Financefair for your working capital needs? 

Are you an Irish SME looking for working capital to grow your business or alleviate a cash flow pinch? Apply today 

What should my working capital financing strategy be? 

Before picking a financing strategy, it’s worth thinking about how conservative or aggressive you want to be.

Here are the three most common working capital financing strategies: 

Conservative approach: if you’re debt-averse

A conservative approach prioritises safety and liquidity. SMEs who opt for this approach tend to minimise risk by maintaining high levels of cash reserves and relying less on external funding. 

This approach is often useful for debt-averse businesses in industries with volatile cash flows.

While a conservative approach offers stability, it can result in missed opportunities. For example, a business might miss out on a bulk-buy discount because it’s reluctant to rely too much on external finance to buy extra stock. 

If this is the approach you’d want to take, then an online business line of credit might be a good source of working capital for you.

This offers you a pre-approved revolving line that you can tap into when you need to. You’ll only pay for what you use, and you’re not locked into a long-term financial commitment. 

Alternatively, if you find yourself regularly waiting 30-60 days (or more) for your invoices to get paid, invoice financing might be a good source of working capital. This allows you to get an advance on your invoice and get paid within 24 hours

Matching approach(also known as hedging): if you’d prefer short-term borrowing

The matching approach aims to balance risk and return by aligning the duration of external working capital financing closely with the lifecycle of financed assets. For instance, if a business wants to take advantage of a bulk-buy discount, it might take out short-term debt that will be paid off quickly. Alternatively, it may decide to take out a term loan for a longer-term investment: such as for strategic projects such as product development, investment in marketing, hiring, and internal digital transformation.

This approach helps businesses manage liquidity risk and financing costs. However, it can be difficult to execute. Obtaining financing with terms that perfectly match a strategic product’s lifecycle can be challenging and can result in a resource drain in managing the administration of constantly setting up new, short-term finance deals. 

Likewise, a company relying on a matching approach may be surprised by sudden changes in the market and be slow to access funding: as setting up separate financing agreements for each asset requirement takes time. 

A business using the matching approach might find revenue-based finance useful. This funding is based on a percentage of your projected revenue. As this is tied to your business performance, there’s little chance of overborrowing. When you use Financefair, we can set up a revenue based finance facility that gives you an injection of capital when you need it most. 

Aggressive approach: if you’re comfortable with risk

An aggressive working capital financing strategy involves taking on high risk for (potentially) high returns. SMEs taking this approach use more short-term financing to fund current assets as well as a portion of long-term assets.

For instance, ​​a retail company might rely heavily on short-term loans to quickly increase its inventory before a major holiday season, betting on high sales to pay off the loans swiftly. This strategy amplifies potential profits but also increases the risk of financial strain (and overstocking) if the expected sales surge doesn’t actually materialise.

The choice between these strategies depends on various factors, including your risk tolerance, growth objectives, individual characteristics, and current market conditions. 

Selective invoice financing can be useful for a business taking a more aggressive approach. You can advance your customer invoices and get paid in 24 hours – meaning you don’t miss out on any growth opportunities while waiting for your customers to pay you. 

What are your options for working capital financing? 

Whether you choose a conservative, hedging, or aggressive approach, you’ll need a flexible source of working capital to manage cash flow gaps and capitalise on growth opportunities.

Here are some of the most popular working capital financing options for an Irish SME: 

Working capital financing Pros Cons
Bank loans • Access to a large amount of funds
• Fixed interest rates and terms for predictable repayments
• Often have eligibility and credit requirements
• Collateral often required
• Can take a long time to apply and receive funds
Business Overdraft • Allows account balance to fall below zero up to a set limit
• Pay interest only on the overdrawn amount
• Higher interest rates than traditional loans
• Fees for exceeding the overdraft limit
• Can quickly become overwhelming
Business line of credit • Pre-approved revolving credit line
• Only pay for what you use
• Fast access to capital
• Limited levels of funding
• Interest cost can be high if poorly managed
Selective invoice financing • Fills a cash flow gap and advances outstanding invoices
• Doesn’t require traditional collateral or personal guarantee
• Fast access to capital
• Limited to 90% of invoice value
Revenue based finance • Based on projected revenue, no overborrowing risk
• No need for collateral
• Funding line grows with revenue
• More expensive than traditional loans
• Suitable for companies with predictable revenues
Crowdfunding • Raise funds from many investors without equity loss
• Engages customers, aids in brand building
• Requires significant marketing effort
• Funding target may not be met
• Platform fees reduce available capital
Venture Capital • Access to significant funds and resources
• Valuable for network connections and business advice
• Highly competitive, lengthy process
• Usually requires equity and control concessions
• Comes with high growth and ROI expectations

At Financefair, we offer revenue based finance, selective invoice financing, and business line of credit.

These options can help you make the most of your working capital financing strategy: without getting into long-term debt or diluting the equity in your business. 

Read on to learn how each option works and which is best for your working capital financing strategy. 

Prefer to talk to an expert to find out the best working capital strategy for your business? Talk to one of our experts

Revenue based financing: capital that grows with you

Revenue-based finance offers your business an infusion of capital by strategically using the projected revenue from your existing contracts. By aligning the financing directly with your projected revenue streams, you can ensure that the capital boost you receive is sustainable and tailored to your business’s growth trajectory. 

This makes revenue-based finance an ideal choice for companies looking for access to working capital without compromising their equity or taking on burdensome debt.

The facility’s operation will differ depending on your financing provider. At Financefair, we’ll examine your forecasted revenue over the next 12 months and your predicted growth rate. This information allows us to determine how much funding we can offer you. We’ll also discuss your business needs with you in detail to ensure you have the right amount of working capital at the right time. 

At Financefair, your facility will be based on:

  • 20% of your annual recurring revenue (ARR)
    or
  • 70% of your quarterly revenue

Once we have all the necessary information, we’ll calculate and confirm the total approved amount we can offer you.

You’re eligible for a revenue based finance facility with Financefair if you meet the following requirements: 

  • Limited company in Ireland with at least 2 directors
  • Trading for at least 1 year
  • Minimum turnover of €300k

Revenue based finance is an excellent source of working capital because we base the size of your facility on your company’s revenue. This means you can get more funding as your revenue grows. And if your projected revenue decreases, you will still be able to access funding relative to the revenue you are generating.

You’ll pay three fees: a platform fee, a monthly facility fee, and a discount charge. Here’s an example of cost:

Annual recurring revenue, including VAT Estimated amount of funding we can advance Estimated cost per 30 days
€500,000 €100,000 €1,500
€750,000 €150,000 €2,250
€1,000,000 €200,000 €3,000

Try the calculator for yourself on our revenue based financing page

For an in-depth working example and more information, check out our revenue based financing guide

Invoice financing: plug cash flow gaps by getting an advance on your invoices

Invoice financing (sometimes called invoice discounting) is an innovative working capital facility that allows you to leverage your existing customer book to draw capital into your business. This eliminates the cash flow gap when waiting for your customers to pay your invoice for work completed (which can take 30-60 days, or even longer). 

With an invoice financing facility from Financefair, you can get an advance of up to 90% of that invoice within 24 hours of raising it. 

There are three types of invoice financing: 

  1. Full book invoice financing: You get an advance on all your invoices.
  2. Selective invoice financing: You only get an advance on the invoices you choose to raise. 
  3. Invoice factoring: Your funding provider takes an operational role in your business and takes over credit control. 

Financefair is the only provider of selective invoice financing in Ireland. 

Invoice financing facilities are also either disclosed (non-confidential) or undisclosed (confidential)

  • Disclosed invoice financing: Your customers will know you’re using an invoice financing facility. 
  • Undisclosed invoice financing: Your customers will assume they’re paying you directly. At Financefair, our invoice financing facilities are always undisclosed and completely confidential. 

Here’s the eligibility for invoice financing with Financefair:

  • Limited company with at least two directors
  • Trading for at least three years
  • Minimum annual turnover of €300,000
  • Average debtor book of €500,000

How does invoice financing work?

Invoice financing will work slightly differently depending on your finance provider, but here’s how it works at Financefair: 

  1. You issue an invoice and raise it on our online platform. Unlike other invoice financing platforms, you only need to raise the invoices you choose at Financefair. 
  2. We’ll give you an already agreed-upon portion of the invoice’s value (up to 90%) as an advance. We’ll pay this into your account within 24 hours. 
  3. After the payment terms are up, your customer pays the invoice amount into an account with your company name, but controlled by Financefair – for 100% discretion. 
  4. As we offer an undisclosed facility, your customers won’t know they’re paying us. 
    1. If you opt for a disclosed facility with a different provider, your customer will know you’re using invoice financing.
  5. We’ll transfer you the remainder of the invoice value minus fees. 
    1. Our pricing structure at Financefair is simple and transparent. You’ll pay an annual platform fee minus any discounts for a strong credit rating. 

Here’s an example of what you might pay: 

Size of facility Cost per 30 days
€150,000 €1,500
€500,000 €5,000
€1,000,000 €10,000

To get an exact figure for your business, try our invoice financing calculator.

For more information on invoice financing, read our guide.

Line of credit: only pay for what you borrow 

An online business line of credit gives your business access to a pre-approved line of funding when you need a boost of working capital. It functions similarly to a digital overdraft, and you only pay for what you use.  

A line of credit facility can be a good option for SMEs who need working capital of €50,000 to €250,000 annually. 

Here’s the eligibility for a line of credit facility with Financefair: 

  • Incorporated limited company in Ireland
  • Trading for at least 1 year
  • Minimum annual turnover of €300,000

Many banks can offer you a line of credit, but you usually have to have been banking with them for a certain amount of time. 

The main benefit of a line of credit is quick access to working capital. Once we’ve set you up on our platform, you can initiate a transfer when you need an injection of capital and receive funds in your bank account in 24 hours. 

This is a more flexible funding option than more traditional funding, like a bank loan. A line of credit is a revolving source of working capital. Once you’ve paid what you owe, you have access to that funding again without having to reapply. 

Financefair is the only provider of a standalone line of credit in Ireland.

With a business line of credit, you’ll pay a platform fee and a monthly fee of 0.6-0.75%, minus any discounts for a strong credit score.  

For more information, read our online business line of credit guide

Three questions to ask yourself when deciding on a working capital financing solution 

When deciding on a facility, use these three questions to help you decide which type of working capital financing solution would work best for your company:

1. What are my cash flow requirements? 

Consider your cash flow requirements: 

  • If your revenue fluctuates with the seasons, revenue based finance might be a great solution for your business. This option ties repayments to your revenue, reducing the risk of overborrowing during slower periods.
  • If you’re experiencing a cash flow squeeze each month while waiting on invoice payments, selective invoice finance can provide up to 90% of an invoice’s value upfront, offering a quick capital boost.

2. How often do I need access to working capital? 

Consider how often you’ll need funding. Bank loans provide a predictable monthly expense and low-interest rates but lack flexibility if you need additional funds. On the other hand, solutions like revenue-based finance and line of credit offer a revolving line of funding, so you’ll always have access to working capital without having to reapply. 

3. Do I have any tangible assets or collateral? 

Traditional bank loans are based on businesses with tangible assets and collateral. If you’re a SaaS business that raises revenue from subscriptions, for example, you’ll find it difficult to get funding from a bank.

Thankfully, many innovative solutions are available that don’t require collateral or tangible assets, such as revenue-based finance, invoice finance, and a line of credit. Moreover, most lenders require a personal guarantee, which puts your personal assets at risk if the business fails. At Financefair, we don’t require personal guarantees on any of our facilities.
 
Read on for three examples of working capital financing strategies for SaaS, e-commerce, and recruitment businesses. 

How a SaaS company used revenue based finance to support their working capital financing strategy 

It’s rare for banks to lend to SaaS businesses, as they lack tangible assets and collateral. Thankfully, there are better options for accessing flexible working capital that work well with a SaaS model.  

At Financefair, we work with a lot of growing SaaS companies. We often recommend revenue based financing.

Revenue based financing is ideal for SaaS businesses with strong revenue streams but few tangible assets. Because payments align with your business revenue, there is no risk of overborrowing. Likewise, there’s no equity dilution, so you can maintain control of your business. 

We recently worked with a business that retrofits commercial vehicles with dashcams and offers comprehensive software for data analysis, working through a SaaS model.

The business approached Financefair, as they needed to secure working capital. They wanted to secure €4 million from investors to venture into new markets. However, they wanted to avoid diluting their ownership too much.

After discussing their situation and ambitions with our experts, the business decided on a revenue-based finance facility, which offers fast access to working capital without giving up equity. 

We could extend them a revolving funding line of €1.5 million. Based on their business forecasts and needs, we disbursed an initial capital injection and distributed the rest in stages. 

With a steady stream of working capital, the company was able to delay its search for investment by 12 months.

This allowed them the time to refine their funding strategy and reduce the size of the investment needed, thus keeping more of their business when they did find an investor. 

Read more about how we can support your SaaS business: SaaS financing: What you need to know 

How a recruitment business could use invoice financing to alleviate a cash flow gap

Many recruitment businesses experience cash flow pinches. You pay your contractors, but you have to wait at least a month or two for the contract owner to pay you. 

Invoice financing works well for a recruitment business to alleviate that cash flow pinch and access working capital. At Financefair, we offer both selective and full-book invoice financing. These facilities are a great option for hybrid or temp recruitment businesses with a high volume of invoicing.

Invoice financing allows your business to get paid for your raised invoices in 24 hours rather than waiting 30, 60, or 90 days to receive funds. 

This gives you the peace of mind that you have the working capital you need to get through a cash flow pinch. 

Imagine a recruitment agency specialising in providing temporary staffing solutions. This agency faces a common challenge: they pay their contractors every week but must navigate a long waiting period before their clients settle invoices and the business gets paid. 

This leaves the recruitment company with a cash flow gap that can disrupt operations and cause financial stress.

To alleviate this cash flow pinch, the recruitment business could turn to selective invoice financing. This allows them to choose high-value invoices and get an advance of up to 90% on them. 

Here’s how it works:

  • The recruitment business earmarks a high-value invoice, say for €60,000, with payment terms of 60 days.
  • The business raises this invoice on the Financefair platform and receives 90% of the invoice’s value in their bank account (€54,000) in 24 hours. 
  • This rapid injection of capital alleviates the cashflow bottleneck and also enables the business to take advantage of new opportunities and tender for new contracts. 

To learn more about your working capital financing options as a recruitment business, read our guide: Recruitment financing: How can you alleviate cash flow pinches? 

How an ecommerce business can use revenue based finance to grow their business

If you’re an ecommerce business, you’ve probably considered taking out a bank loan to use as working capital, perhaps to help with inventory management.

While you may have tangible assets to use as collateral for a loan, this type of financing lacks flexibility. Once the funds from the loan are gone, you’d have to re-apply to the bank to get another dose of working capital. Most banks are unlikely to offer you a second loan, and you can lack the working capital you need to manage and grow your business. 

At Financefair, we’ve helped many ecommerce businesses use revenue-based finance to access a revolving line of funds that act as fast injections of working capital. 

Consider an e-commerce business operating through Shopify, looking to scale operations and expand its market reach. This business, already showing promising growth with over €1m in annual turnover, is looking for a flexible financing solution to support its ambitions without diluting ownership or taking on restrictive debt.

Imagine that this company has applied to Financefair and passes on its sales data and growth projections. After getting back to the company (within 24 hours), we were able to set up a revenue-based financing facility within the week.

We could loan the company 20% of their future annual recurring revenue. There was an initial injection of capital, and then we strategically dispersed the rest of the funds throughout the year. After receiving funding (24 hours after setting up the facility), the company was able to put the capital to work by: 

  • Making inventory levels and improving supply chain: Utilising discounts for bulk inventory purchases to improve margins and investing in a more cost-efficient supply chain. 
  • Filling cash flow gaps: Smoothly managing operational expenses during periods of fluctuating sales.Ensuring timely payroll and contractor payments 
  • Amplifying digital marketing efforts, including SEO, social media, and pay-per-click advertising, to drive sales and expand the customer base.

Revenue based finance could be an invaluable growth tool for this ecommerce business. It can provide the liquidity they need to scale, without having or taking on long-term debt or giving up equity. 

Are you an ecommerce business looking for working capital to improve your day-to-day operations and grow? Read more here: Ecommerce financing: What are your options? 

Why choose Financefair for your working capital needs? 

Financefair (formerly InvoiceFair) was founded in 2015 in Dublin. Our team of experienced industry experts offers tailored working capital solutions to grow your business. 

We’ve been helping Irish SMEs grow with invoice finance, revenue based financing and business line of credit facilities. 

Here’s what you get with Financefair:

We’ll give you an indicative offer within 24 hours of applying

Our streamlined processes and expert team allow us to give you an indicative offer in just 24 hours. 

And once your application is approved and you’re set up on our platform, we can release your funds within 24 hours. 

We use advanced data analytics to get read-only access to your most recent accounting and open banking information. This gives us an accurate and real-time view of your business finances so we can offer you the best facility for your current needs. 

Access more working capital, thanks to our unique funding model

The funding a traditional bank can offer comes directly from its balance sheet. We work differently. We partner with a number of investors who advance the funding. This allows you to get a larger overall working capital funding. 

Bank loans also come with strict concentration and risk rules. Many banks don’t want to provide additional financing to a business that already has a credit line with them, making it challenging to access more funding on top of your existing loan.

Because we offer flexible working capital financing solutions, we can tailor your facility as needed and offer you more funding as your company grows – without you having to re-apply.  

Apply digitally for a seamless end-to-end experience, or reach out to our team 

We understand the importance of making funding as accessible as possible. That’s why you can start your journey with Financefair in under 5 minutes by completing our application form

Of course, if you’d prefer to speak to our expert team, you can always contact us to discuss how we can grow your business. 

Financefair is the only provider of revenue based finance, selective invoice financing, and a standalone business line of credit facility in Ireland. 

Here are some other benefits of choosing Financefair: 

  • You can easily swap facilities: You might start out with a business line of credit and want to switch to revenue-based finance as your revenue increases. This is a simple process at Financefair. 
  • You don’t need blue-chip debtors or tangible assets: At Financefair, we look at the strength of your revenue: we don’t need you to have tangible assets or blue-chip debtors. 
  • We don’t require a personal guarantee from the business owner, so your personal assets, like your home, are never at risk. 
  • Our pricing is simple: there are no hidden fees or costs.

Choose Financefair to support your working capital financing strategies 

At Financefair, we pride ourselves on offering tailored working capital solutions to ambitious Irish SMEs. 

By using our innovative financing methods – like revenue based finance, line of credit, and invoice financing – you can access a source of working capital without burdening your business with debt, or diluting equity. 

To get started with Financefair, complete an application form. Alternatively, reach out to our team of experts to discuss your options. 

 

40+ Business Loan Statistics: in Ireland and Worldwide 

The business financing world is in a period of transformation, fuelled by the cost of supply chain, inflationary pressures, and technological advancements. 

These changes are reshaping how businesses, especially SMEs, approach growth funding. While traditional business loans remain popular, more businesses are leaning towards more innovative and flexible financing solutions, like revenue based finance and invoice financing.

To help you understand the current landscape of business financing, we’ve compiled over 40 business loan statistics. We’ll focus on Ireland where possible, but we’ll also include relevant UK and US trends, as these markets often set precedents and influence global standards and practices for SMEs.

Here are five key business loan statistics: 

  1. The volume of gross new lending from banks to Irish SMEs during the fourth quarter of 2022 amounted to €952 million, a 13% decrease compared to the previous year, showcasing the lowest level of new lending since the third quarter of 2021.¹
  2. Forecasts expect the alternative lending market in Ireland to grow by 17.3% annually to reach US$357.2 million in 2023, with a projected increase to US$528.3 million by 2027.²
  3. In the UK, the share of businesses using external finance was 33% in Q3 2022. This was a significant drop from 44% in Q3 2021 and the lowest level since the start of the pandemic in the first half of 2020.³
  4. In Ireland, the small business loan sector has experienced a decline in debt levels, with a significant reduction from €27.1 billion in 2010 to €12.8 billion in 2020.⁴
  5. In the UK, in 2022, a fifth (20%) of SMEs who applied for business finance had their applications rejected despite having a ‘good or excellent’ business credit score.⁵

In this article:

Where are SMEs borrowing from?
How much are SMES borrowing?
How much are SMEs paying for their business loans?
Why are SMES looking for finance?
Are businesses getting accepted for business loans? 
Is alternative business financing becoming more popular?
FAQ

Are you an SME looking for business financing in Ireland? Reach out to find out if Financefair can grow your business. 

Where are SMEs borrowing from? 

It’s probably not surprising to learn that traditional banks are the most common funders of business loans. The most recent financial reports show that: 

In Ireland:

  • During Q4 2022, the gross new lending from banks to SMEs was €952 million – a 13% decrease on Q4 2021. This marks the lowest level of new borrowing since the third quarter of 2021.¹
  • In 2022, there was an increase in gross total lending (including new and existing financing) to SMEs – around €4.2 billion. This is a 4.3% rise on 2021.¹

In the UK:

  • 7% of SMEs had sought a business bank loan between 2019 and 2022.³
  • Government grants and business credit cards were the most popular forms of business finance in this period, with 12% of SMEs using at least one from 2019-2022. It’s important to note that government grants during COVID-19 have influenced these stats.³
  • According to British Business Bank research, bank loans and private lending rose in demand from 3% to 10% between 2021 and 2022.³
  • Most other finance options didn’t increase in demand during this period, except for ‘loans from a director, individual, or other organisation’, which increased from 10% to 11%.
  • According to Statista, business bank loans and bank overdraft facilities have remained the most popular forms of financing for SMEs from 2019 to 2022.

Image source: Statista

In the US:

The business finance environment in the states significantly differs from the UK and Ireland. Many businesses receive loans backed by the U.S. Small Business Administration (SBA). 

These typically have lower down payments and more flexible overheads than traditional bank loans. 

  • According to the data from the federal reserve (and reported by Forbes), US businesses that did opt for a traditional bank loan, 43% turned to large banks, 36% to small banks, and 23% to online lenders.⁸business stats image 2Image source: Forbes⁸ 

Challenger banks and digital lenders are becoming increasingly popular

There aren’t any reliable statistics on the popularity of challenger banks with SMEs in Ireland. 

  • However, Statista expects the Irish digital banking market to reach a value of US$16.2bn (€15 billion) in 2024, with an annual growth rate of 10.30%. As such, we might expect to see challenger banks become a common source of business financing for Irish SMEs.⁸

In the UK:

  • In 2021, digital platforms in the UK experienced sustained and increased expansion, building on the momentum gained in 2020 due to the widespread adoption of online services amidst COVID-19.⁹
  • In 2022, the growth of these digital platforms slowed, and investment decreased, shifting back towards pre-pandemic funding levels.⁹
  • Still, in 2022, challenger and specialist banks accounted for 55% of SME gross lending, up from 51% in 2021 and overtaking the big five banks for the second year running.³
  • (The “big five” banks in the UK refer to Barclays, HSBC, Lloyds Banking Group, NatWest Group, and Standard Chartered).

In the US:

  • Forbes found that 23% of small business loan applicants opted for online lenders in 2021 – an increase from 20% in 2020.

How much are SMEs borrowing?

In Ireland

  • It’s hard to find exact statistics on how much Irish small businesses typically borrow. But we do know that the total money owed by small businesses decreased significantly: from €27.1 billion in 2010 to €12.8 billion in 2020.

In the UK

  • A study by the British Business Bank noted a rise in the average loan size for SMEs from 2021 to 2022. In 2022, the median loan amount reached £14,000, marking a 40% increase from the previous year’s median of £10,000.

business stats image 3

Image source: British Business Bank

  • According to SME Finance Monitor, 36% of SMEs used external financing in 2022, with one-third of these businesses taking out loans exceeding £25,000. This marks a 7% decrease from 2021.¹⁰
  • Only 23% of sole proprietorships (businesses without any employees) secured loans above £25,000. In contrast, 84% of larger SMEs, those with 50 to 249 employees, borrowed more than £25,000.¹⁰
  • Nearly half (48%) of SMEs in the UK were categorised as permanent non-borrowers, indicating they had yet to receive current loans, nor were they expected to seek borrowing in the future.¹⁰

In the US: 

  • According to Nerd Wallet, the average short-term loan from a traditional bank (and not under the SBA scheme) was $20,000, and $110,000 for a medium-term loan.²⁷

business stats image 4

Image source: Nerd Wallet²⁷

How much are SMEs paying for business loans? 

The last few years have seen inflation increase significantly in many parts of the world, meaning that the cost that SMEs are paying for their business finance is constantly changing. 

In Ireland:

  • The average interest rate on new SME loans reached 5.23% at the end of 2022, and the average interest rate on outstanding SME loans also rose to 4.47%.¹business stats image 5
    Image source: Central Bank of Ireland¹
  • Since then, interest rates have increased. In January 2024, AIB listed a variety of business lending interest rates, including an SME Variable Business Loan rate at 5.95% and an SME Fixed Rate Loan at 7.45%​​.¹¹
  • Meanwhile, Bank of Ireland offers unsecured business loans with a variable rate of 7.05% and secured loan variable rates at 6.05%​​.¹²

In the UK:

In the UK, the Bank of England’s (BoE) base rate is the central reference for interest rates set by the country’s central bank. This rate has experienced significant fluctuations over the past few years.

On 3 August 2023, the BoE’s base rate was adjusted to 5.25%, marking its highest level since 2008. This sharp increase from the historic low of 0.1% in 2020, during the COVID-19 pandemic, was part of a broader strategy to curb inflation that began escalating in 2021.¹³

  • In 2020, the environment of low base rates led to relatively low-interest rates for business loans. At this time, the average interest rate for new business loans was around 3.44%.¹⁴
  • The increase in the BoE’s base rate in August 2023 led to a rise in the interest rates for business loans, at an average of 6.97% for new business loans.¹⁴
  • As of January 2024, unsecured business loan interest rates range from 6% to 15%.¹⁶

Why are SMEs looking for financing? 

In the UK

  • According to a NerdWallet study of 500 senior SME decision-makers, a third of SMEs need access to business finance to survive the next six months.¹⁷
  • Statista reports that in 2022, the top reason 60% of small and medium businesses (SMEs) in the UK sought external funding was for working capital. Additionally, 42% of these UK SMEs sought funding to buy fixed assets.¹⁸

business stats image 6

Image source: Statista¹⁸ 

In the US:

  • According to a Forbes survey, most US business owners spent their loans on growing their business, with 42.4% naming it as one of their top three uses. Buying equipment was the second most popular choice, mentioned by 29.4% of those surveyed. 28.6% of those surveyed mentioned that they would use the loan for marketing and advertising expenses.⁸

business stats image 7

Image source: Forbes⁸

Are businesses getting accepted for business loans? 

There’s limited information on loan approval rates in Ireland, and the US has a significantly different loan landscape (thanks to SBA loans). 

So to understand how many businesses are getting accepted for business loans that meet their financing needs, it’s helpful to look at UK statistics.

In the UK:

  • In 2022, just 64% of SMEs received the complete sum of financing they sought from their preferred provider, while an additional 12% were only approved for amounts lower than their initial request.⁹
  • This represents a notable decline from the previous four years, during which more than 80% of SMEs typically received the requested amount in full.
  • Sole proprietorships (businesses without employees) experienced the lowest acceptance rates, with lenders approving only 57% of their finance applications. Conversely, businesses employing between 50 and 249 individuals saw their loan applications succeed at a high rate of 98%.⁹

Due to this, we’re seeing SMEs consider more than one lender. 

  • In the UK, in 2022, nearly one-third (32%) of SMEs reported considering multiple finance providers, such as online lenders, up from one in five (20%) in 2021.¹⁹ 
  • The overall count of SMEs contemplating external finance sources also rose in 2022, with 91% considering at least one finance provider, an increase from 85% in the previous year.¹⁹

business stats image 8

Image source: Finder¹⁹

Is alternative business financing becoming more popular? 

We’ve seen that challenger banks and digital lenders are becoming increasingly popular with small business owners and entrepreneurs.

But recent statistics have also shown that alternative business financing is quickly becoming a popular option for SMEs

Alternative business financing is anything that isn’t a typical business loan: including revenue based financing, peer-to-peer lending, and invoice financing. 

Here are some statistics on alternative business financing: 

In Ireland:

  • The alternative lending market in Ireland is on an upward trajectory, with projections indicating a yearly growth of 17.3%, targeting a valuation of US$528.3 million by 2027.²

In the USA:

  • Forecasts expect the alternative lending market in the United States to reach approximately $8.68 billion in transactions in 2022. It’s predicted to expand at an annual growth rate of 2.4% from 2021 to 2025.²⁰
  • Globally, the alternative lending market was valued at approximately $334.28 billion in 2021, and is expected to grow at a compound annual growth rate of 4.70% between 2021 and 2025.²¹

In the UK:

  • In 2023, the alternative lending market was valued at US$ 48.06 billion.²²
  • Forecasts expect this to expand at a growth rate of 10.8%– increasing from US$ 39.98 billion in 2022 to US$ 72.48 billion by the end of 2027.²²

Looking for alternative business financing in Ireland? Financefair offer revenue based financing, invoice finance, and online business line of credit. Reach out to find out more. 

Revenue based finance

A common form of alternative business lending is revenue based finance.

Unlike fixed-repayment traditional loans, revenue based finance offers dynamic, growth-aligned financing based on business projections. Essentially, an SME can use their future revenue as working capital. Financefair is the only provider of revenue based finance in Ireland.

This option is popular for asset-light but revenue-steady companies like SaaS firms, who often struggle to get funding from most traditional financial institutions.²³

Worldwide: 

  • The market for revenue-based financing is on a sharp upward trajectory, and is set to expand from a valuation of $1.98 billion in 2022 to $3.38 billion in 2023, marking a growth rate of 71.2% year over year. Looking ahead to 2027, forecasts suggest the market will balloon to $25.94 billion, demonstrating a steady growth rate of 66.4%.²⁴

In Ireland: 

Peer-to-peer business lending

Peer-to-peer (P2P) business lending functions like a business loan, but the business borrows from investors through a digital platform – rather than a traditional bank. They’re often faster and easier to get than traditional loans, but come with more risk.

In the UK:

  • Since 2012, the peer-to-peer business lending market in the UK has seen consistent growth, reaching a total of 4.02 billion British pounds by the year 2020.²⁴

business stats image 9

Image source: Statista²⁴

Invoice finance:

Invoice discounting allows businesses to receive an advance on the money owed in unpaid invoices, effectively using these invoices as collateral. This method provides quick access to funds without a traditional loan, helping fill cash flow gaps and provide working capital. While there is no statistics on invoice finance in Ireland specifically, it can be helpful to look at UK trends: 

In the UK: 

  • A study by Time Finance UK revealed that invoice finance is emerging as a preferred alternative financing method for many businesss. They reported that 32% of financial intermediaries expect invoice finance to become the primary mechanism for supporting cash flow.²⁵
  • According to a 2022 report by UK Finance, invoice finance funding reached an average quality advance of nearly £21 billion. This is a 32% increase on 2021, which was just below £16 billion.

business stats image 10

Image source: UK finance[9]

To learn more about how invoice financing works, check out our guide. 

FAQ

How much does the average SME borrow on a business loan?

In Ireland: Specific figures on average loans for Irish SMEs aren’t readily available, but businesses are borrowing less overall. Total debt has decreased from €27.1 billion in 2010 to €12.8 billion in 2020.

In the UK: The median business loan amount for SMEs was £14,000 in 2022, up from £10,000 in 2021.

In the US: The average short-term loan from a traditional bank was $20,000, and $110,000 for a medium-term loan.²⁷ 

How much does a business loan cost an Irish SME in interest?

In Ireland, the average interest rate on new SME loans was 5.23% at the end of 2022, and the average interest rate on outstanding SME loans rose to 4.47%.[1] Interest rates have increased since then, with AIB listing various business lending interest rates, including an SME Variable Business Loan rate at 5.95% and an SME Fixed Rate Loan at 7.45% in January 2024.¹¹

What are the alternatives to business loans?

Alternatives to business loans include revenue based finance, invoice financing, and online business line of credit. The alternative lending market in Ireland is predicted to reach a value of US$357.2 million in 2023.²

What is revenue based finance?

Revenue-based finance provides funding for businesses with consistent revenue streams by aligning capital amounts with projected income. This option doesn’t require a business to have blue-chip debtors and is popular with SAAS businesses, which often receive revenue through subscriptions. 

What is invoice financing?

Invoice financing (also known as invoice discounting) allows businesses to receive an advance on the money owed to them in unpaid invoices, using these invoices as collateral. This method provides quick access to funds without needing a traditional loan, helping to provide cash flow for working capital. 

The future of business financing

While business loans will always be an important tool for growing businesses, we’re seeing a significant increase in alternative financing options, like revenue based finance and invoice financing. 

Financefair is at the forefront of this transformation in Ireland, offering innovative financing solutions tailored to the unique business needs of SMEs. We offer revenue-based finance, invoice financing, and business line of credit to Irish businesses looking to grow. 

To find out how we can support your business, fill out an application form. 

Sources

1 https://www.centralbank.ie/docs/default-source/statistics/data-and-analysis/credit-and-banking-statistics/business-credit-and-deposits/2022q4_trends_in_sme_and_large_enterprise_credit_and_deposits.pdf?sfvrsn=8acb991d_4
2 https://www.globenewswire.com/news-release/2024/01/30/2819745/0/en/Ireland-Alternative-Lending-Business-and-Investment-Opportunity-Report-2023-Market-will-Increase-from-304-6-Million-in-2022-to-Reach-528-3-Million-by-2027.html
3 https://www.british-business-bank.co.uk/wp-content/uploads/2023/02/J0189_BBB_SBFM_Report_2023_AW.pdf
4 https://www.oecd-ilibrary.org/sites/92f28ade-en/index.html?itemId=/content/component/92f28ade-en
5 https://www.nerdwallet.com/uk/business-loans/access-business-finance/
6 https://www.british-business-bank.co.uk/wp-content/uploads/2023/04/BBB_SMEFinanceSurveyReport_2022.pdf
7 https://www.statista.com/statistics/460373/sme-methods-of-finance-united-kindom/
8 https://www.forbes.com/advisor/business-loans/small-business-loan-statistic
9 https://www.ukfinance.org.uk/system/files/2023-06/Business%20Finance%20Review%202023%20Q1%20-%20FINAL.pdf
10 https://www.bva-bdrc.com/sme-finance-monitor/
11 https://aib.ie/business/interest-rates/business-lending-rates
12 https://businessbanking.bankofireland.com/credit/business-loans/business-loan/
13 https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2023/august-2023
14 https://www.bankofengland.co.uk/statistics/money-and-credit/2022/may-2022
15 https://www.bankofengland.co.uk/statistics/effective-interest-rates/2023/august-2023
16 https://www.money.co.uk/business/business-loans/average-business-loan-interest-rate
17 https://www.nerdwallet.com/uk/business-loans/access-business-finance/
18 https://www.statista.com/statistics/460353/sme-reasons-to-seek-external-financing-united-kindom
19 https://www.finder.com/uk/business-loan-statistics#
20 https://www.leadsquared.com/industries/lending/alternative-lending/
21 https://www.creditsuite.com/blog/small-business-lending-statistics-and-trends/
22 https://www.fintechfutures.com/techwire/united-kingdom-alternative-lending-market-report-2023-challenger-banks-and-digital-lenders-are-recording-strong-growth-amid-the-current-macroeconomic-environment/
23 https://blog.tbrc.info/2023/11/revenue-based-financing-market/
24 https://www.globenewswire.com/news-release/2023/11/20

Recruitment financing: How can you alleviate cash flow pinches? 

You might be experiencing the following funding problems as a recruitment company: 

  • You regularly experience a cash flow gap. You pay your contractors but then have to wait for the contract owner to pay you. 
  • You might find it difficult to secure a traditional term loan, or you may avoid them due to their inflexibility and long-term commitment. You may be unsure about working with a specialist recruitment company.
  • A business overdraft is becoming tricky to manage, and you’re worried about overborrowing. 
  • You need funding fast, and you don’t want to wait weeks to hear back from the banks just to find out how much they can lend you. 

This article will explain your options as a recruitment financing company, whether you should opt for a specialist recruitment financing company, and go into detail on invoice financing. 

In this article: 

What are your options as a recruitment financing company?
Invoice financing: alleviate cash flow pinches by getting an advance on your invoices
How a recruitment agency can use invoice financing to cover cash flow gaps
How to get started with Financefair
Why choose Financefair? 

Talk to our experts to find out how Financefair can grow your business 

What are your options as a recruitment financing company? 

You’ve probably already looked into getting a business loan to give your business some breathing room while you wait for unpaid invoices. Finding funding as a recruitment company can be difficult due to the stringent requirements and inflexibility inherent in traditional funding systems. 

Fortunately, there are other financing options that might be a better fit. Here’s an overview: 

Financing Option Pros Cons
Bank loan Fixed interest rates and predictable payments. Requires collateral and has strict qualification criteria
Lengthy application process
Requires a personal guarantee
Business overdraft Access funds as needed
Quick setup compared to loans
Higher interest rates than loans: fees for exceeding limit
Not suitable for long-term financing, can encourage overspending
Selective invoice financing Get an advance only on your most significant invoices: less resource intensive than full book
Funds in your account within 24 hours (with Financefair)
Doesn’t require a personal guarantee (with Financefair)
Can cost more than traditional financing, like business term loans
Less working capital than if you opted for full book
Full book invoice financing Get an advance on a large amount of working capital (from all of your invoices)
Funds in your account within 24 hours (with Financefair)
Doesn’t require a personal guarantee (with Financefair)
Can be operationally intensive, especially if you have lots of smaller contracts
Invoice factoring (including specific recruitment financing products) Outsourced credit control. The factoring company manages collections
Quick access to funds: improves cash flow
Customers deal with the factoring company, which could impact customer relationships
Fees and the percentage of invoices taken as commission can be high.

 

At Financefair, we can offer solutions directly aligned to the receivables generated when you generate your revenue (even if that’s on a recurring revenue basis). We offer invoice financing (both selective and full-book), to enable you to get an advance on funds already owed to you, so you can alleviate a cash flow pinch and take advantage of growth opportunities – without giving up equity or getting into long-term debt. 

Read on to learn more about invoice financing and why it’s an excellent fit for recruitment companies. 

Invoice financing: alleviate cash flow pinches by getting an advance on your invoice 

Invoice financing, also known as invoice discounting, is a financing facility that allows you to use your existing customer book to inject capital into your business. 

This facility enables you to get advance on existing invoices to alleviate the cash flow pinch that comes with waiting 30-60 days for your invoice to be paid. 

Invoice finance facilities are either undisclosed or disclosed: 

  • Undisclosed or confidential: Customers don’t know you’re using invoice financing. This is a discreet option, meaning you continue to handle your own invoices, payments, and collections. Financefair offers confidential invoice financing. 
  • Disclosed or non-confidential: Disclosed invoice finance means your customers will know that you’re using finance. A lender might decide to impose a disclosed facility on a company based on risk factors. One form of disclosed invoice financing is invoice factoring. With this facility, the lender takes an operational role in the business, essentially taking over credit control and payments. Financefair offers undisclosed facilities. 

You have the option to choose between full book and selective invoice financing: 

  • Full book invoice financing means raising all of your business’s invoices. While this allows you to advance more capital, it can be resource-intensive and time-consuming, so it’s best suited for a larger recruitment company. 
  • Selective invoice financing involves raising only your most significant invoices. This is a popular option for recruitment companies with a few large and many smaller invoices. It’s less operationally intensive and easier to manage than full book. Financefair is the only provider of selective invoice financing in Ireland. 

Here’s how invoice financing works in action: 

  1. You’re waiting to get paid for an outstanding invoice from the contract owner but are committed to paying your contractors weekly. As such, you’re experiencing a cash flow gap.
  2. You raise an invoice (either all of your invoices if you have a full book agreement or specific invoices if you’re on selective invoice financing). 
  3. Your facility provider will send you an advance. This will be a pre-agreed percentage (agreed upon when you set up with us). At Financefair, we can offer you up to 90% of the invoice value and deposit the money in your account within 24 hours.  
  4. Your customer will pay for your invoice in a separate account managed by your financing provider. If it’s a disclosed facility, your customers will know: if not, they’ll assume they’re paying your business directly. 
  5. Once your customer has paid the invoice, your provider will send you the remaining percentage of the invoice minus fees. 

There are specialist recruitment financing solutions that will do this for your business. However, you often have to take a larger financial package – including credit control, payroll, etc. 

While this might suit some recruitment businesses, it can be expensive, and many business owners prefer to retain more control. 

Interested in a selective facility? Learn more in our selective invoice financing guide

What to consider when choosing an invoice finance provider

There are a few things to keep in mind when you’re choosing an invoice financing provider:

  1. Advance rate: With invoice financing, your lender will offer you a percentage of the invoice value. This usually depends on the lender’s risk appetite and your business circumstances. Financefair offers up to 90% of the invoice value. It’s essential to ensure you get a high enough rate so you have enough access to capital to get you through a cash flow pinch.
  2. Cost of funding: Our invoice financing costs range from 0.75% to 1.50% per 30 days. Here’s an example of what a invoice financing facility might cost you: 
Size of Facility Cost per 30 Days
€100,000 €1,000
€500,000 €5,000
€1,000,000 €10,000

Our pricing is simple. We’ll charge you an annual platform fee and monthly facility fee (on full book facilities)– minus any discount for a high credit score.

(To get a specific cost for your business, try the calculator on our invoice discounting page)

3. Full book or selective invoice financing: Full book involves financing all your raised invoices. It’s slightly more expensive than selective financing and requires more operational effort. On the other hand, selective invoicing is slightly more cost-effective and permits the financing of only the invoices you choose to raise. Financefair is the sole provider of selective invoice financing in Ireland.

Here are the invoice finance providers in Ireland, the facilities they offer, and their advance rates:

Provider Facilities Offered Invoice Value
Financefair Full book invoice financing, Selective invoice finance facility Up to 90%
Close Brothers¹ Full book and invoice factoring facilities Up to 90%
Bibby² Full book and invoice factoring 80-100%
AIB³ Full book invoice financing Up to 85%
Bank of Ireland Full book invoice financing Up to 85%

Banks tend to offer disclosed facilities, meaning that your customers will know you’re using invoice finance. Alternative providers offer a mix of disclosed and undisclosed facilities, depending on your individual circumstances. 

Financefair offers undisclosed invoice financing, so your customers aren’t aware you’re using the facility. 

Unsure if selective or full book invoice financing is right for your business? Get in touch with our team

Should you choose invoice factoring or a standalone invoice finance facility? 

Many financing companies offer a ‘recruitment finance’ product, which is usually a form of invoice factoring. This is where your financing company essentially takes over the credit control of your business.

Invoice factoring can be a good fit for your recruitment business if: 

  • You have a small team and limited time: Invoice factoring can be a good fit for small teams who need external support in managing credit control.
  • You’re willing to entrust aspects of your business to a third party: Entrusting operational aspects such as credit control to a third party can ease your workload, allowing you to dedicate attention elsewhere.

On the other hand, taking out financing through a standalone invoice financing, like Financefair, might be better for you if:   

  • You want low-commitment, flexible funding: Invoice financing is a fairly low-commitment option, especially if you choose selective invoice financing. You only need to raise invoices you choose to, so you’re not obligated to take out financing each month. Invoice factoring can require more commitment and have increased administration.
  • You have budget constraints: Invoice factoring facilities are typically more expensive than standalone invoice financing, due to the financing company managing credit control. 
  • You’d prefer to maintain business control: While some business owners are comfortable outsourcing significant business operations, others prefer to keep control in-house.

To discuss your funding needs and get the best facility for your business, get in touch with our experts

How a recruitment company can use invoice financing to cover cash flow gaps

Consider a recruitment company that supplies temporary workers: they pay contractors weekly but must wait 30 days (or longer)  for contract owners to settle invoices, leading to a significant cash flow gap. This strain on liquidity hampers daily operations, causes anxiety, and stalls potential growth opportunities.

The business initially completed an application form for Financefair, which they were able to do completely online. However, they decided to contact our expert team for personalised advice on their financing. After discussing their business and growth ambitions with our team, the business decides on invoice financing. They opt for selective invoice financing in order to improve business operations by minimising friction in obtaining working capital.

Here’s how it works in practice: 

  • The recruitment agency identifies a high-value invoice—say, €30,000—due in 30 days. 
  • They raise the invoice through Financefair selective invoice financing and receive 90% of the invoice value (€27,000) in their account within 24 hours. 
  • This capital injection alleviates the cash flow pinch, enabling the recruitment company to meet payroll, invest in marketing, and take on additional contracts without waiting for the payment cycle to complete.

Financefair’s solution uniquely suits the recruitment sector, offering local expertise and the flexibility to increase funding as your customer base expands and revenue grows. 

This means the recruitment agency is not locked into a one-size-fits-all approach but has access to a range of solutions, including revenue based finance and business line of credit, ensuring they can adapt their financial strategy to match their evolving needs.

How to get started with Financefair

We can work with Irish recruitment companies who meet the following eligibility criteria:

  • Limited company with at least two directors
  • Trading for at least three years
  • Minimum annual turnover of €300,000
  • Average debtor book of €500,000

Getting started is easy:

  1. To apply:
    1. Contact our team, who can discuss your company’s funding requirements. We can let you know if your company is eligible and our recommended facility for your needs. Call +35315252486, email busdev@financefair.com, or book an appointment with an expert. 
    2. Complete a funding application form. This takes less than 5 minutes. 
  2. Offer: We’ll send over an indicative offer within 24 hours. 
  3. Onboard: If you’re happy with the offer and wish to accept it, we’ll onboard you onto our online platform and run KYC and AML identity checks.
  4. Funding: Once we’ve set your facility up, we can get funds into your bank account within 24 hours. 

Ready to get funding? Apply today 

Why choose Financefair for invoice financing?

Invoice finance solutions are becoming an increasingly popular option for recruitment companies. It allows you to alleviate a cash flow pinch without getting tied into long-term debt or giving up equity. But why should you use Financefair? Here are a few reasons:

We offer selective invoice financing, so you don’t have to finance your whole debtor book

At the time of writing, we’re the only provider of selective invoice financing in Ireland. While we offer full book financing, selective financing can be a good choice for recruitment companies with a few significant contracts and many smaller ones who want to limit operational resources. 

Here’s an example of where selective invoice financing could be a good fit: 

  • You currently have three large contracts and seven smaller ones. 
  • You pay your contractors but have to wait 30-60 days to get paid by the contract owner.  
  • The three large contracts cause the cash flow pinch, and you’re happy to wait for the smaller ones. 
  • Selective invoice financing allows you to get an advance only on the three large contracts, without the admin and operational costs of raising all ten.

Financefair can advance invoices from €30,000 and provide a facility of up to €5m (if your company meets our criteria). 

Since we’re a standalone invoice financing solution, you won’t have to pay the additional fees that come with a specialist recruitment agency.

We can alter your funding solution as your business grows 

Whether you choose selective or full book invoice financing, you won’t be trapped in a long-term commitment. We regularly check in with your business to ensure you get the best possible funding solution to grow your business.

For instance, you might decide to start with selective invoice financing, but soon have many larger contracts and a bigger team. In that case, we can simply move you from a selective to full book invoice financing facility. We also offer two other forms of financing: 

  • Revenue based finance: Where you use your projected revenue to inject capital into your business. 
  • Line of credit: A pre-approved funding line, where you can access instant working capital and draw on it when needed. You only pay for what you use. 

The Financefair team has decades of financial services experience. When you reach out, we’ll take the time to understand your business needs. We’ll use data analytics to assess your funding requirements, to get you the best growth option possible for your business.

Our platform is seamless, and won’t take up your teams time and resources 

Many invoice discounting providers require you to upload financial information on a specific day of the week (sometimes even at a specific time). If you don’t, you could be subject to fees. This manual process can be time-consuming and eat up a lot of your team’s resources. It can be hard to focus on your company growth when you’re bogged down by frustrating admin.

But with Financefair, our platform accesses your financial information seamlessly through secure data analytics so we can automatically get the data we need. This means you don’t have to worry about checking in each morning to update your financials, and saves you and your team valuable time and resources.

The seamlessness of the Financefair platform enables us to provide your business with an indicative offer in just 24 hours. And once we have all of the necessary documentation and you’re onboarded to the platform, we can disperse funds in 24 hours. 

Use invoice financing from Financefair to cover cash flow pinches and grow your recruitment business 

As a growing recruitment business, a cash flow pinch can seriously harm the health of your business. 

With invoice financing from Financefair, you can get an advance on up to 90% of your future invoices. This gives you the peace of mind that you have the capital you need to get through a cash flow gap and grow your business – without getting into long-term debt. 

Ready to get started? Apply today

Sources:

¹https://www.closeinvoice.co.uk/

²https://www.bibbyfinancialservices.com/funding/invoice-finance-products

³https://aib.ie/business/loans-and-finance/finance/invoice-finance

⁴https://businessbanking.bankofireland.com/credit/finance/invoice-finance



SaaS Financing: What you need to know to get started 

Funding the scale of your software as a service (SaaS) business can be challenging. Banks often won’t loan to you as you don’t have tangible assets, and your financing options might feel limited to taking on bank debt, or giving up equity – both of which have restrictive terms. 

In your search for financing, you’ve probably experienced the following: 

  • You want to get your funding sorted as soon as possible: you don’t want to wait weeks for an answer.
  • You’re struggling to be accepted for traditional funding. Traditional funders typically don’t support SAAS business models.
  • You don’t want to commit to a multi-year term loan and want a more flexible, lower-commitment option. 
  • You don’t want to give a personal guarantee and put your home and personal assets at risk. 

This article will run you through your options for financing as a SaaS company. 

In this article: 

Are you an Irish SaaS business looking for business funding? Get in touch

What are the finance options for a SaaS company? 

Here’s an overview of the most popular forms of financing for a SaaS company:

Type of Funding Description Pros Cons Growth Stage
Bank loans Traditional term loan from banks No equity dilution
Clear repayment terms
Can have lower interest rates than alternative lending
Requires proof of profitability or collateral
Difficult to get accepted for as a SaaS business
Inflexible: you’re tied in for the length of the loan
Scaling (mature businesses)
Revenue based financing Financing tied to your future business projections No dilution of equity
Flexible repayment terms based on business performance
No long-term commitment
No personal guarantee (if using Financefair)
Can be more expensive than a traditional bank loan Early Growth to Scaling
Online business line of credit Works similarly to a digital overdraft Only pay for what you use
Revolving credit: once you pay off your borrowed amount, that funding is available again
No long-term commitment
No personal guarantee (if using Financefair)
Business banks usually require you to have a current account with them (unless you use a standalone lender like Financefair) Early stage to early growth
Venture Capital (VC) Investment from venture capitalist firms in exchange for equity Access to significant capital, mentorship, and networks Loss of equity
Often high expectations for growth
Highly competitive process to get funding
Early growth to scaling
Angel investment Investment from high-net-worth individuals More flexible terms than VC
Access to investors’ expertise and network
Equity dilution
Smaller amounts of capital compared to VC
Seed to early stage SaaS startups
Crowdfunding Raising small amounts of money from a large number of people, typically via online platforms Access to capital without giving up equity (if reward-based) Requires significant marketing effort
Not suitable for large funding needs
Lack of consistent funding
Can give up equity (equity crowdfunding)
Seed to early stage SaaS startups

As a provider of revenue based finance and line of credit, we’re going to go into detail about each option, so you can decide whether they’re right for your SaaS business. 

It’s worth noting that both revenue based finance and line of credit can be used in tandem with other finance options – like a bank loan, VC, or even crowdfunding. 

Prefer to talk to us right away to find out how RBF and LOC can help your business grow? Get in touch.

Revenue based financing: capital that grows with you

Revenue based finance gives you access to working capital that’s directly connected to the  revenue growth of your business. This allows you to grow your company independently leveraging off your future revenue from existing contracts, eliminating the need for long-term debt or an over-reliance on equity financing. 

Because we’re writing this article, we’ll run you through how revenue based financing works at Financefair. It might work slightly differently depending on the lender you use.  

If you’re an Irish business that meets the following criteria, you’re eligible for revenue based finance with us:

  • Limited company in Ireland with at least 2 directors
  • Trading for at least 1 year
  • Minimum turnover of €300k

Our process involves examining your forecasted revenue over the coming year alongside your anticipated growth trajectory.  When you apply for revenue based finance, we’ll start by evaluating your business’s cash flow forecasts for the upcoming 12 months. This helps us determine your maximum funding requirement—the largest amount of capital you anticipate needing within this timeframe.

We can offer you a maximum of 20% of your ARR or 70% of your quarterly revenue. These funds can be disbursed either quarterly or monthly, with adjustments made according to your growth projections.

Because we base the size of your facility on your company’s revenue, you can unlock higher funding amounts as your revenue grows. 

We’ll work with you to make sure that you have enough capital to manage any shortfalls in cash flow. Once we have all the information we need, we’ll calculate and confirm the total approved amount we can offer you.

For instance, we might authorise a credit line of €500,000 for the year, initially releasing €200,000, with subsequent disbursements timed to address provide capital injections at key growth periods where cashflow is maximised. This setup allows you to move forward over the next several months with confidence that you have secure funds available to handle a cash flow pinch. 

You can learn more about how it works in our revenue based financing guide

What happens if your revenue decreases? 

If your projected revenue increases (or decreases), the amount of funds you can access will change. However, we won’t just cut off your facility.

As a fintech company, we can use our advanced data analytics to quickly check how your company is performing, eliminating the need for constant updates on your financial standings. This means we can be proactive about reaching out to discuss potential changes in funding for the upcoming quarter based on your projected revenue.

How much does revenue based financing cost?

The terms and pricing for your revenue-based financing are established at the start of a 12-month arrangement. 

Your fee is based on:

  • Your company
  • Your company’s experience
  • Average debtor days
  • Average debtor book
  • Turnover
  • Funding limit
  • Credit score

Our fees are straightforward

  • Platform fee: This works like a joining fee. If you renew your facility after 1 year, the renewal fee will be 50% of the initial platform fee. 
  • Monthly facility fee: This is a fixed fee charged on the facility limit we provide.. 
  • Discount charge: The higher your credit score, the higher a discount we can offer on your agreed pricing.

You can pay for your financing in two different ways: 

  • Per 30 days
  • As a percentage of the cost of funding

Here’s what it might cost your SaaS business: 

Annual Recurring Revenue Including VAT Estimated Amount of Funding We Can Advance Estimated Cost per 30 Days
€500,000 €100,000 €1,500
€750,000 €150,000 €2,250
€1,000,000 €200,000 €3,000

Actual costs will vary, depending on your business.

Try the calculator for yourself on our revenue based financing page. 

The benefits of revenue based financing

  • You’ll get a line of funding that’s directly related to the growth of your business. This reduces the chance of under or overborrowing, and your funding will scale up as your business grows. 
  • It’s flexible and not a long-term commitment. Unlike with a term loan, you’re not tied into a multiple-year agreement with revenue based financing. 
  • No need for additional applications: If you find that you need a higher level of funding to make the most of growth opportunities, there’s no need to fill in another application form. Just reach out to us
  • It’s relatively low risk, which means we can keep security to a minimum. Because the money is only out for 90 days at a time, the risk is moderate. This reduces the security documentation you need to complete when you apply. 
  • If you’re planning on bootstrapping, revenue based finance is a great working capital solution that doesn’t require giving away equity. However, it also works well alongside other forms of investments, such as venture capital or angel investors. If you decide to go after Series A funding in the future, a higher ARR can help increase your company valuation.

You can find out more in our revenue based financing guide

Line of credit: funding you can tap into when you need it

If your business isn’t quite ready for revenue based financing, or you just want to finance a smaller amount, a business line of credit is a great option for a SaaS company. 

A business line of credit functions like a digital overdraft facility, that you can tap into whenever you need it. You’ll only pay for what you use. 

Line of credit is best for SaaS businesses who need access to around €10,000 to €250,000 annually. 

Here’s the eligibility for a line of credit facility with Financefair: 

  • Incorporated limited company in Ireland
  • Trading for at least 1 year
  • Minimum annual turnover of €250,000

As a SaaS business, you’ve probably found that there are certain points of the quarter where you experience a cash flow dip. Or perhaps you want the ability to make the most of growth opportunities, without worrying if you have the capital to do so.

With a business line of credit, you have quick access to a source of working capital. You can initiate a transfer through our online platform, and receive funds in 24 hours. 

This is a far more flexible and efficient option than more traditional funding, like a term-loan, where you have to lock in for a certain amount of time. Likewise, this is a revolving line of credit – once you pay the funds off, you can access them again. 

Many banks offer a business line of credit, but you usually need to have a current account with them, and have had your account open for a certain amount of time.

Financefair is the only provider of a standalone business line of credit in Ireland. 

Our pricing is transparent: costs typically range from 0.75% to 1.50% per 30 days, depending on your business.

You’ll pay:

  • A monthly fee of 0.6-0.75% 
  • The platform joining fee 
  • Depending on your credit rating, there may be a discount applied

The benefits of business line of credit

  • Allows you to fund milestone needs in the business. Perhaps you need to upgrade expensive equipment as your operations expand, or work on product development for your software. A line of credit facility gives you the funds to do so.
  • SaaS funding that you can access quickly to make the most of a growth opportunity. Perhaps you have the chance to tender for a big client, but want to make sure you have the upfront capital to deliver. You can tap into your line of credit funding and get paid within 24 hours.
  • It’s flexible, and you only pay for what you use. With a business line of credit, you’re not stuck in a long-term financial commitment. We won’t charge you if you don’t use it.
  • No equity dilution, and no personal guarantees. We won’t take any equity in your business, and we won’t ask for a personal guarantee – so you’re not putting your personal assets at risk. 

A business line of credit gives you the peace of mind that you have the funds there if you need them.

Interested in a business line of credit? Apply today in 5 minutes

Why choose Financefair for your SaaS financing? 

You might be interested in revenue based financing and line of credit for your SaaS company: but why should you choose Financefair?

Here are a few reasons:

Get more funding sooner, thanks to our innovative business model

Thanks to our unique business model, we’re able to advance a larger amount of funds to business without tangible assets – like SaaS companies. 

That’s because unlike banks, we don’t fund directly from our balance sheet. We partner with enthusiastic investors who understand SaaS businesses, and can advance the funding you need to grow. This means you might get 20% from one, 50% from another, and so on. This diversification enables you to get more funding than you would with a traditional lender. 

You have more flexibility to choose multiple types of financing 

Both revenue based financing and line of credit are far more flexible than a bank loan. You’re not left waiting until your term-loan ends before you can apply for a higher amount of funding. 

And when you sign up to Financefair, it’s simple to move from one funding facility to another. 

For example, you might be an early stage SaaS business who is best suited to an online line of credit in the short-term. However, your business plans works as planned and your monthly revenue is increasing – soon, the funding level of a line of credit might not be enough. In that case, you can easily switch to a more appropriate financing solution, like revenue based finance.

Once you’re on-boarded, our experts are always on-hand to discuss your facility, and move you to a different one if it will suit your business better. 

Get an indicative offer within 24 hours

It can be frustrating waiting to find out how much financing you can receive from a lender. You can spend weeks waiting, just to find out the amount you can borrow is too low. 

At Financefair, we can give you an indicative offer in one business day. And when you’re onboarded on our platform and we have all your documentation, you can access funds within 24 hours.

We’re able to do this because of our platform and our use of data analytics. We’ll have access to real time account data metrics, and can make a decision quickly, reducing friction and admin time. We’ll also regularly check-in to discuss your business, and discuss how we can change your facility – based on your needs.  

Our team has decades of experience in financial services, and we can help guide you to the best solution for your SaaS business. 

Other benefits of using Financefair include:

  • None of our funding options require you to give up equity in your business. 
  • We’re the only provider of revenue based financing and standalone business line of credit in ireland. 
  • You don’t need a personal guarantee. There’s no need to put your home and personal assets at risk to grow your business. 
  • You won’t be charged any hidden annual fees or costs. Our pricing and monthly payments are clear from the outset. 

Interested in Financefair but not sure where to start? Reach out to our friendly team, who can help find the best solution for your business.

How a SaaS company used revenue based financing to grow their business and retain equity

A company specialising in retrofitting fleet vehicles with dash cameras for enhanced security and providing software for data collection approached us for financial guidance.

Their technology bolstered security and gathered valuable data for businesses and the insurance sector.

Despite their innovative service they found themselves in a financial dilemma when it came time to scale.

Eager to secure €4 million in additional funding to penetrate new markets and solidify their vision, they were reluctant to dilute their ownership by parting with more equity.

Understanding their predicament, we proposed a solution tailored to their growth objectives without the need for equity sacrifice: revenue based financing. This flexible financing model aligned perfectly with their working capital financing strategy, allowing them to leverage their incoming revenue for growth capital.

We extended to them a €1.5 million revolving funding line, which we disbursed in stages, calibrated closely with their business forecasts. This strategic funding approach provided them with the immediate capital required to forge ahead, while also granting them the flexibility to manage their finances more effectively.

Thanks to this arrangement, the company was able to postpone its search for investment funding by approximately 12 months. This crucial period of financial breathing space enabled them to not only refine their funding strategy but also to significantly reduce the amount of additional investment needed. As a result, they successfully preserved a larger share of their business ownership, positioning themselves more favourably for future growth and success.

Choose Financefair for your SaaS financing 

Without tangible assets, it can be a challenge to get a level of funding you’re satisfied with from a traditional lender. 

However, with facilities like revenue based finance and business line of credit from Financefair, you can secure the funding and support you need to grow your business – without diluting equity.

If you’re a SaaS business in Ireland that meets our eligibility and is looking for non-dilutive financing, apply today, and let’s discuss how Financefair can grow your business. 

Ecommerce financing: What are your options?

As an ecommerce business looking for funding, you’ve probably experienced the following: 

  • You need funding as soon as possible, but you don’t want to wait weeks to get accepted for a bank loan and even longer to get the funds. 
  • You’re looking for more flexible financing. You want to avoid committing to a multi-year term loan, and you’d prefer funding that is always available: without having to make al on application. 
  • You’re reluctant to give a personal guarantee. You don’t want to put your personal assets, like your home, at risk. 
  • You’re an Irish ecommerce business and need a financing partner that can fund you in Ireland. 

At Financefair, we’ve helped many ecommerce companies grow, using facilities like revenue-based finance and business lines of credit. We’ll discuss these two facilities in depth and how they can benefit an ecommerce business.  

In this article: 

Wondering how we can help you grow? Get in touch with our expert team

What are the funding options for an ecommerce company? 

Bank loans are the most common form of funding for most businesses. But there might be some other funding options that you’re not aware of that might be better suited for a growing ecommerce store:

Funding Type Description Pros Cons
Bank loans Term loans offered by banks with fixed repayment terms and interest rates
  • Generally lower interest rates than alternative lenders
  • Strict qualification criteria
  • Long approval times
  • Lacks flexibility
  • Requires a personal guarantee
Revenue based finance Funding that’s tied to your projected revenue
  • Flexible repayment terms
  • Based on your projected revenue, so can increase as your business grows
  • No personal guarantee (with Financefair)
  • Can be more expensive than traditional loans
  • Not suitable for new businesses (less than 2 years)
Business line of credit A revolving credit that businesses can draw upon as needed, up to a predetermined limit. Works similarly to a digital overdraft
  • Flexible
  • Only pay interest on what you use
  • No personal guarantee (with Financefair)
  • Requires good credit
  • Can have high-interest rates if not managed well
Merchant cash advance An advance on future credit card sales, repaid via a percentage of those sales
  • Fast access to cash
  • No need for traditional collateral
  • High costs and fees
  • Percentage of credit sales can significantly impact profit margins
Crowdfunding Funding your business through small investments from a large number of people
  • Access to a wide pool of investors
  • No guarantee of reaching funding goals
  • Public failure if goal not met
  • Requires a significant marketing effort
  • Loss of equity (depending on crowdfunding type)
Angel investing Individual investors providing capital for a business start-up, usually in exchange for convertible debt or ownership equity
  • Potential for valuable mentorship
  • Loss of some control and equity
  • It can be challenging to find the

At Financefair, we can offer ecommerce businesses revenue based finance and line of credit. We’ll go on to explain each option in more detail to help you decide if it’s right for your business. 

Both revenue based finance and line of credit can be used alongside other finance options, including bank loans and VC. 

Rather get started right away? Get in touch

Revenue based financing: capital that grows with you

Revenue based finance is a financing facility that unlocks trapped liquidity in your business. 

The funds a lender will advance are directly linked to your future business performance. This means you won’t over or under-borrow – which is especially important for an ecommerce business, where sales can ebb and flow.

At the time of writing, Financefair is the only revenue based finance provider in Ireland. 

Here is our eligibility criteria for revenue based finance:

  • Limited company in Ireland – at least two directors
  • You’ve been trading for at least one year
  • Minimum turnover of €1m

Our experts will examine your projected revenue and predicted growth trajectory over the next year. This information allows us to calculate your maximum funding requirement (how much you might need within 12 months).

From there, we can offer you a maximum of either:  

  • 20% of your Annual Recurring Revenue (ARR)
  • 70% of your quarterly revenue

We can pay your funding monthly, quarterly, or a mixture of both.

Our goal is to ensure that you have the capital you need to manage any cash flow pinches and take advantage of growth opportunities. For example, we might offer your company a credit line of €500,000 for the year. We’ll initially release €200,000 and disburse the rest of the funds when your business experiences a cash flow dip.

And because your available funding depends on your company’s projected revenue, you can access higher funding levels as your business grows.

If your company’s projected revenue decreases, we’ll advance fewer funds but won’t cut off your facility. And because we’re a fintech company, we can use advanced data analytics to determine how your company is performing and be proactive, without the need for constant check-ins.

Learn more in our revenue based financing guide

How much does revenue based financing cost?

The costs of revenue-based finance are transparent––you’ll know what you’ll pay at the start of the 12-month agreement. There are no hidden costs. 

We’ll calculate your fee based on:

  • Your company
  • Your company’s experience
  • Average debtor days
  • Average debtor book
  • Turnover
  • Funding limit
  • Credit score

You’ll pay:

  • Platform fee: This fee covers your joining our platform. If you stick with your facility after one year, you’ll pay less. The renewal fee is 50% of the initial platform fee.
  • Monthly facility fee: This is the fixed fee we charge you based on the facility limit we’re providing. 
  • Discount charge: We can offer you a discount on pricing based on your credit history.

You have two options in how you pay for your funding: 

  1. Per 30 days
  2. As a percentage of the cost of funding

Here’s an example of what revenue based finance might cost your business: 

Annual recurring revenue including VAT Estimated amount of funding we can advance Estimated cost per 30 days
€500,000 €100,000 €1,500
€750,000 €150,000 €2,250
€1,000,000 €200,000 €3,000

Please note: actual costs depend on the individual circumstances of your business 

To get a more specific cost for your business, try the calculator on our revenue based financing page. 

The benefits of revenue based financing

Revenue based financing is an excellent option for ecommerce businesses in a growth stage.

Here’s why: 

  • You’ll receive funding that aligns with your business’s expansion. This approach minimises the risks associated with borrowing too little or too much, allowing your funding to grow concurrently with your growth. 
  • It offers flexibility without the need for a lengthy commitment. In contrast to traditional term loans, revenue based financing doesn’t lock you into a multi-year contract.
  • There is no extra paperwork required. If you need more funds to capitalise on growth opportunities, you won’t have to submit a new application. You can simply contact our friendly team.
  • Less admin and paperwork. Revenue-based financing is a relatively low-risk form of lending. We only advance funds for 90 days at a time, so we need less security documentation, reducing admin time. 
  • Revenue-based financing is compatible with other investment types, including traditional bank loans, venture capital, and angel investments.

When does it make sense to use RBF as an ecommerce company?

If your ecommerce business encounters any of the following, revenue based finance can help:

  • You experience seasonal fluctuations, with your sales ebbing and flowing throughout the year. Revenue based finance offers the flexibility to manage inventory and marketing efforts in line with these peaks and troughs, allowing for strategic investments during high-demand periods without the pressure of fixed repayments in slower seasons.
  • You’re aiming to expand your product range or enter new markets, so you need an immediate capital injection. Revenue based finance provides scalable funding aligned with your sales performance, so you can facilitate growth without overburdening your business financially with long-term debt.
  • You want to take advantage of bulk-buy stock discounts. As an online seller, understocking can significantly affect your profitability – but you might be nervous to invest too much capital into stock. Revenue based finance gives you the confidence to manage stock levels, and take advantage of bulk-buy discounts. 

An example of this in practice: How revenue-based financing helped this ecommerce business grow without debt or equity can grow an ecommerce business

Imagine your Shopify ecommerce business experiences a monthly revenue growth rate of 25%, starting from an initial revenue of €250,000. This growth trajectory forecasts the following revenues over the next six months:

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6
€250,000 €312,500 €390,625 €488,281 €610,352 €762,939

After taking the time to discuss your business needs with you, we agree to advance funds based on your revenue forecast, starting quarterly (for an initial boost of capital) and then moving to a monthly basis.

Here’s how it works: 

Initial quarterly advance: 

  • At the start of month 1, we offer an advance based on 70% of the combined forecast revenue for the first three months (€250,000 + €312,500 + €390,625 = €953,125).
  • Therefore, 70% of €953,125 equals €667,188. This is the amount we’ll initially advance at the start of month 1.

Monthly advances: 

  • By the end of Month 1, with your anticipated revenue of €250,000, you will be positioned to start repayments. Specifically, you’ll repay 70% of the funding we advanced based on your Month 1 revenue. This means you will repay €175,000 at the end of Month 1 (70% of €250,000).
  • With your quarterly advance paid, as agreed, we’ll move to a monthly advance schedule. At the end of Month 1 (or the beginning of Month 2), we will advance 70% of your projected Month 4 revenue, which amounts to €341,797 (70% of €488,281).
  • At the end of Month 2, upon receiving your actual revenue of €312,500, you will repay 70% of this amount, totalling €218,750.

This pattern continues with advances and repayments based on the upcoming month’s projected revenue and the actual revenue received.

revenue based financing graph

In this scenario, the advances you receive functions as a revolving credit line, grounded in your projected income for the upcoming month. This setup enables you to leverage your forthcoming revenue as a means to grow. 

With the financing in place, an ecommerce company can use the funds to:

  • Capitalise on bulk inventory discounts to enhance profit margins.
  • Address cash flow variances, ensuring smooth operation despite sales fluctuations and securing timely payroll and contractor payments.
  • Boost digital marketing efforts across SEO, social media, and pay-per-click campaigns, driving sales and expanding its customer base.
  • Invest in new product development, or expand your base of operations 

Through Financefair’s revenue based financing solution, an ecommerce company can sustain its upward trajectory and lay a foundation for future growth – without taking on long-term debt or diluting equity. 

Wondering if revenue based finance might be the right business funding for you? Apply today 

Online business line of credit: only pay for the funding you use 

An online business line of credit works like a digital overdraft. You have a line of funding you can tap into when you need to, and you’ll only pay for what you borrow. The credit line is revolving, so once you’ve paid it off, it’s accessible again.

This form of business financing is usually better suited to online sellers that aren’t quite ready for revenue based financing, and looking for yearly funds from €10,000 to €250,000.

Here are the eligibility requirements:

  • Must be an incorporated limited company registered in Ireland.
  • Have been operating for a minimum of one year.
  • Achieve a yearly turnover of at least €250,000.

As an ecommerce business, you’ll know that it’s common to encounter cash flow challenges during specific periods of the quarter. You might also be looking for funding to take advantage of business growth opportunities. 

A business line of credit offers fast and easy access to working capital. With Financefair, you can transfer funds and receive them within 24 hours.

This method is significantly more convenient than traditional funding solutions, like business loans, which require a commitment to a set duration (usually three to five years). Unlike with a loan, you can pay off your credit line, and instantly have access to that funding again. There’s no need to re-apply. 

While many banks provide business lines of credit, they often require you to hold a current account with them (usually for at least a year). 

Financefair is the only provider in Ireland that offers a standalone business line of credit, without needing an accompanying bank account. 

Our pricing structure is clear and straightforward: charges usually vary between 0.75% and 1.50% every 30 days, based on the specifics of your business.

You’ll pay: 

  • A monthly fee ranging from 0.6% to 0.75%
  • The fee for joining the platform
  • A potential discount based on your credit rating

How much funding could you get?

Your approved line of credit depends on your annual turnover. Here are a few examples: 

Annual turnover including VAT Line of credit you could be approved for
€250,000 €50,000
€750,000 €150,000
€1,250,000 €250,000

The benefits of business line of credit

There are four key reasons to consider a business line of credit: 

  1. Flexibility: A line of credit offers the flexibility to finance key milestones within your business. Whether it’s upgrading costly equipment as part of your operational growth, or advancing product development, a line of credit means you always have an easy-to-access source of capital. 
  2. Fast access to capital: If you’re presented with the chance to bid for a significant client but need assurance of upfront capital for delivery, a line of credit can be tapped into, with payment received in just 24 hours.
  3. Only pay for what you use: With a line of credit, you only pay for what you use, avoiding any long-term financial obligations. It’s also a revolving line of credit, so you can reaccess those funds once you pay off what you owe. 
  4. No dilution of equity or personal guarantees: Opting for a line of credit doesn’t dilute equity, and we don’t require a personal guarantee. As a business owner, this means your business equity remains intact, and your personal assets are not at risk.

A business line of credit gives you the peace of mind that funds are available whenever yo need them. 

Apply today in just 5 minutes

When does it make sense to use line of credit as an ecommerce company?

Line of credit differs from revenue based finance in that it’s not tied directly to your projected growth. Instead, it works more like an overdraft and might be a better fit for early-stage ecommerce businesses who: 

  • Need immediate, flexible access to capital for short-term needs. With a line of credit you can access funds only when you need them, and you aren’t penalised for having an available line of credit. You only pay for what you use. By having a line of credit facility, you can better prepare your business financially for short-term business expenses, without the commitment of a loan.
  • Are looking to smooth out cash flow irregularities. Ecommerce businesses often experience volatile cash flows due to seasonal sales patterns or varying payment processing times. A line of credit can provide a buffer to manage these irregularities, ensuring you have capital on hand to cover operational expenses as they arise.
  • Would prefer a revolving fund without a direct tie to revenue. If you’re an early-stage ecommerce business, your projected revenue may not be strong enough yet for revenue based finance.  A line of credit offers similar benefits by giving you a revolving fund you can draw from, payback, and then draw from again, offering ongoing access to capital. 

Looking to learn more about other types of financing? Read our other guides:

Why choose Financefair for your ecommerce financing? 

Both revenue based financing and line of credit can be a powerful growth tool for ecommerce businesses. But what makes Financefair the right finance provider for you? 

Here are three reasons to consider us: 

1. Our innovative business model means you can get more funding

Thanks to our innovative business approach, we can offer significantly more funding to ecommerce businesses than banks might be able to. 

Banks’ funding is limited to their balance sheet. At Financefair, we collaborate with a network of investors ready to provide financial support for your business’s expansion.

This could mean securing 30% of your funding from one investor, 40% from another, and varying percentages from additional sources. 

This diversification strategy allows us to offer higher funding levels than what’s typically available through conventional lenders.

2. Low commitment: flexibility to switch financing solutions with ease 

Both revenue based financing and lines of credit offer greater flexibility than traditional bank loans. There’s no need to wait for a term loan to conclude before seeking additional funds.

For even more flexibility, transitioning between financing solutions at Financefair is straightforward.

For instance, if you’re in the early stages of your ecommerce business, a line of credit may initially suit your needs. But as your business and revenue grow, you might outgrow this option and need a higher level of funding. 

At that point, our experts can help you switch to a better solution, like revenue based finance, without having to go through a funding application process again. 

3. Receive an indicative offer in just one day 

Waiting for funding approval can be tedious and disheartening, especially when the offer falls short of your expectations.

With Financefair, you can get an indicative offer within a single business day. Once we’ve gathered all the necessary documentation and fully onboarded you to our platform, accessing funds can take as little as 24 hours.

Thanks to our innovative platform and analytics capabilities, we can access real-time account data to make fast funding decisions and minimise wait times. 

Additional advantages of choosing Financefair include:

  • None of our facilities require sacrificing equity in your business.
  • We are the sole provider of both revenue based financing and independent business lines of credit in Ireland.
  • You don’t have to put your home and personal assets at risk: we’ll never ask for a personal guarantee
  • Our pricing is transparent from the beginning. There are no hidden fees or hidden charges.

Got questions?  Contact our team, who will help you find the best funding solution for your business 

Grow your ecommerce business with flexible funding options from Financefair 

For a growing and ambitious ecommerce business, traditional bank loans often don’t cut it –  due to their long approval times and inflexible terms.

In this article, we’ve explored more innovative financing solutions that align with the unique needs of ecommerce businesses in Ireland: revenue based finance and online business line of credit.

Whether you’re navigating seasonal sales fluctuations or looking to expand, Financefair’s founding solutions offer the support your business needs to thrive.

Ready to fuel your ecommerce growth? Get funded

Term loans: What you need to know, and the alternatives

Term loans are a popular option for businesses in Ireland. They’re easy to understand — you borrow a certain amount, at a fixed interest rate, for a set length of time. 

However, you might face the following problems:

  • Frustration at the inflexibility of loans and how long it takes to extend your funding if your business needs change.
  • Issues getting the funding amount you need from your business bank at an interest rate you’re happy with. 
  • Waiting weeks for a decision on a loan application and potentially missing growth opportunities. 
  • You need to know in advance if you can get the funding you need to fulfil a contract you want to tender for.

This article will look at the providers offering business term loans in Ireland. We’ll then consider three alternatives that could be better for your company’s situation and needs: revenue-based finance, invoice discounting, and line of credit facilities. 

We’ll cover:

Reach out to us to discuss how we can fund your company with solutions that are much more flexible than a term loan. 

Term loans in Ireland: What options are available?

Your options for term loans in Ireland include: 

  • Banks: Term loans are available from the three main banks in Ireland:
    • Bank of Ireland: For loans up to €120,000, you can apply online and should hear back within 24 business hours, while loans over €120,000 can take longer to arrange. You can borrow up to €120,000 with an unsecured loan, with terms of up to 7 years.1
    • AIB: For loans up to €300,000, download the online application form and return it to your branch or relationship manager. For loans over €300,000, you’ll need to speak directly to your branch or relationship manager.²
    • PTSB: Download the application form online and take it to your local branch. Both short- and long-term loans are available, with terms of up to 10 years.³
  • Peer-to-peer lenders: A term loan from a traditional bank involves borrowing from a single, regulated financial institution under standardised terms. A term loan from a P2P lender involves borrowing from multiple individual investors through an online platform, often with more flexible terms and eligibility criteria. Some SMEs are offered lower interest rates with peer-to-peer loans. A well-known lender in Ireland is Linked Finance, who offer loans from €10,000 to €500,000 (that last up to 5 years).⁴

Term loan alternatives

With term loans, you borrow a fixed amount and pay off the loan in monthly installments, plus interest, based on your agreed repayment schedule.

While this arrangement may be suitable for personal loans, it can limit business growth due to the difficulty in quickly adjusting funding. However, other well-established options offer greater flexibility and an approach to finance more tailored to your business.

Here are three of these solutions, all of which we offer at Financefair: 

Revenue-based finance

Revenue based finance is a funding method that offers an advance on funds tied up in your monthly recurring revenue. It takes your regular monthly earnings and turns them into a funding source that you can use to grow your business. It’s a good option for companies that don’t have physical assets but have recurring contracts or non-contracted revenue, like subscription-based or SaaS businesses.

The main advantage of revenue-based finance over a term loan is the flexibility. With a term loan, lowering your repayments can be difficult. This can be challenging if your business experiences a cash flow pinch. Likewise, if your business does better than expected, you might want to increase your funding to make the most of growth opportunities.

With revenue based finance, we base your funding amount on your future projections. We review your funding regularly, meaning your repayments can decrease or increase as appropriate. Unlike with a loan, where you have a set amount to repay with fixed payments, revenue based financing adjusts to the peaks and troughs of your company’s revenue.

Here’s how it works: 

  • We review your projected income for the next 12 months.
  • This allows us to offer you up to 20% of your Annual Recurring Revenue (ARR) or up to 70% of the next quarter’s revenue
  • We can provide the funds monthly or quarterly and adapt them to fit your revenue growth.

Here are some scenarios where revenue based finance can work well:

  • You don’t have blue-chip debtors, but your recurring revenue is stable.
  • You’re scaling your company.
  • You want to manage your working capital more effectively and stop operating month to month.
  • You have some contracts ongoing, but you want access to extra cash to tender for new contracts.
  • You’re considering raising equity in the future. Revenue based finance can also be used alongside VCs and other types of investors.

In Ireland, revenue based finance is only available from Financefair. To be eligible, your company needs:

  • To be a limited company with at least two directors
  • To have been trading for at least one year
  • A minimum turnover of €1 million

For more details, read our article: Revenue based financing: What it is and how to get started

Invoice discounting

Invoice discounting, also known as invoice financing, allows businesses to access cash by using their existing customer invoices to fund new contracts. It’s a convenient way to unlock funding without committing long-term to a loan.

There are two types of invoice discounting: selective and full book.

Selective invoice financing lets you choose which invoices to finance. This means you can select your largest, most significant invoices without raising invoices with much smaller sums. Selective can be a good option for smaller companies with only a few larger contracts (and many smaller ones). We are the only provider of selective invoice finance in Ireland.

With full book invoice discounting, you finance all of your invoices, which is slightly cheaper but can be more operationally intensive. Full book works well for businesses with larger teams and the resources to manage it.

Depending on the provider, you may be able to choose between disclosed (also known as non-confidential) or undisclosed (also known as confidential) invoice discounting. With a disclosed facility, your customers know you’re using invoice discounting. Invoice factoring is a common type of disclosed invoice finance where the funding provider effectively takes over your credit control. 

With undisclosed invoice financing, your customers won’t know you’re using invoice discounting. You’ll be in charge of sending invoices and collecting payments as usual.

Here’s how invoice discounting works:

  1. You create an invoice.
  2. The provider gives you a pre-agreed advance, usually a percentage of the total invoice value (for example, up to 90%).
  3. Your customer pays the invoice amount to an account managed by the provider. If the facility is undisclosed, your customer assumes they’re paying you, but if it’s disclosed, they’ll know they’re paying a third party.
  4. The provider then sends you the invoice balance minus any fees.

In Ireland, there are several providers offering invoice discounting:

  1. Financefair: Choose either selective or full book invoice discounting and get an advance of up to 90% of the invoice value. You can apply for and manage your facility online, and once it’s approved, we’ll deposit funds into your account within 24 hours. To estimate the cost of invoice discounting, try our calculator. Our eligibility criteria requires that you:  
    1. Are a limited company with at least two directors 
    2. Have a trading history of at least three years
    3. Have a minimum annual turnover of €3 million
    4. Maintain an average debtor book of at least €500,000
  2. AIB: Full book invoice discounting that you can manage online, with an advance of up to 85% of the invoice value.
  3. Bank of Ireland: Full book invoice discounting, typically for invoices that have been outstanding for up to 90 days. Provides an advance of up to 85% of the invoice value.⁶
  4. Close Brothers: Invoice factoring and full book invoice discounting, with an advance of up to 90% of the invoice value.
  5. Bibby: Invoice factoring and full book invoice discounting that you can manage online.

These providers may offer disclosed and undisclosed options based on your company’s perceived risk. Banks usually offer disclosed facilities, but all of Financefair’s invoice financing is undisclosed.

For more information about invoice discounting, read our article: Invoice discounting: How to get started

Line of credit

A line of credit is a type of financing that works similarly to a digital overdraft. It allows you to quickly access working capital whenever you need it, while only paying for what you use. 

A line of credit gives your business lots of flexibility. For instance, you might need to place a large order of stock to fulfil a new contract or to make the most of a bulk-order discount. Line of credit can help you make the most of these opportunities. 

Line of credit providers, like Financefair, can often offer businesses more funding than a traditional overdraft – up to €250,000 per 12-month period in our case. Additionally, these credit lines are more flexible than bank overdrafts. If you have a bank overdraft or loan, increasing your funding requires a new application, but with a line of credit, it’s easier to arrange a funding extension.

Once we’ve set your facility up, accessing the funds is simple. Unlike with invoice financing, you don’t need to redirect customer payments to a separate account. When you need to access funds, we’ll deposit them into your bank account via a bank transfer.

A line of credit might be the right choice for your business if you:

  • Need quick access to a flexible cashflow for a milestone or project.
  • Prefer a flexible funding option without a long-term commitment. 
  • Don’t want to divert incoming payments to another bank account.
  • Need funding fast and don’t have time to wait for the decision on a small business loan application.

AIB is currently the only Irish bank offering line of credit facility to current account customers. Financefair is the only provider offering it as a standalone option. To qualify for our line of credit facility, you must: 

  • Primarily operate as B2B.
  • Have a debtor book – but your clients don’t need to be blue chip.
  • Connect your financial software with our platform.
  • Fit the other rating criteria we look at. This includes your business credit score, history and creditworthiness, and business performance.

Why choose Financefair?

Established in 2015 by industry professionals, Financefair is an alternative lending platform that provides customised working capital solutions to Irish businesses. Previously known as InvoiceFair, our focus is offering businesses the funding they need to grow.

To do this, we offer business line of credit facilities, selective invoice finance, full book and selective invoice discounting, and revenue based financing

Here’s why you should consider working with Financefair to grow your business:

Get business funding plus the flexibility to switch solutions if you need to 

The financing we offer at Financefair offers more flexibility than a fixed-term loan: you’re not stuck waiting until your loan ends before you can apply for a higher (or lower) loan amount. Also, you can have a business finance solution with Financefair and a traditional loan from your business bank. 

When you reach out to us, we’ll assess your current funding needs and discuss where you see your business going in the long run. From there, we can determine which funding solution might be the best fit for you. 

Because we know how important flexibility is, we make switching to another funding solution easy if your needs change. As the only provider in Ireland that provides revenue based finance and a standalone line of credit, we can provide you with a wide range of options that other providers can’t – all on one easy-to-use platform. 

Here’s what else you should know about our financing products:

  • The business owner doesn’t have to give a personal guarantee: Term loans usually always require some kind of personal guarantee. Financefair never requires a personal guarantee: so your home and other personal assets aren’t at risk. 
  • Our pricing is transparent: No hidden fees will crop up later on. You’ll know from the outset exactly what the cost is. 
  • You don’t need blue-chip debtors to get funding from Financefair: If your business has a subscription or recurring revenue model, securing funding from a bank can be difficult. 

Find out in one business day if we can fund your business.

One of the problems with term loans is how long it can take to find out if the bank has accepted your application. We know how important it is to be able to move fast if a business opportunity comes your way. For that reason, we ensure your indicative offer is with you in one business day

If you decide to accept our offer, you’ll need to complete some paperwork, and we’ll then set you up on the Financefair platform. When that’s all sorted, you can access your funding within 24 hours. To ensure we can move quickly, we use a combination of data analytics and a knowledgeable team with decades of industry experience. 

Benefit from decades of financial services experience 

When your facility is up and running, we’ll still be on hand if you want to discuss your funding, particularly if things change and you think another solution may suit your business better. We’ll speak to you directly to make sure we have a good understanding of which funding solution might best suit which situation. 

For example, we’ve seen that e-commerce businesses wanting to scale can do so more effectively with revenue based finance. Because revenue based financing is a more flexible option, it allows businesses to get hold of the funds they need faster. This lets them move more quickly than they might be able to if they had a loan and needed to secure more funding. 

Scale your company with frictionless, flexible funding from Financefair

In this article, we’ve looked at the options for term loans in Ireland, along with some of the most popular banks and peer-to-peer providers. 

We’ve also pointed out the limitations of term loans: namely, the lack of flexibility and ability to adapt as your business grows.

At Financefair, we offer innovative, more flexible funding alternatives that can grow with your business: revenue based financing, line of credit, and invoice discounting. 

If one of those solutions sounds like it might work well for your company, get in touch with the team today to find out more. 

Sources

¹https://businessbanking.bankofireland.com/credit/business-loans/business-loan/
²https://aib.ie/business/loans-and-finance/loans-up-to-60k
https://aib.ie/business/loans-and-finance/loans-from-60001-300k
³
https://www.ptsb.ie/business-banking/term-loans/
⁴https://www.linkedfinance.com/business-financing/
https://www.linkedfinance.com/borrower-faqs/
⁵https://aib.ie/business/loans-and-finance/finance/invoice-finance
https://businessbanking.bankofireland.com/credit/finance/invoice-finance/how-does-it-work/
https://www.closeinvoice.co.uk/invoice-discounting
⁸https://www.bibbyfinancialservices.com/funding/invoice-finance-products
https://www.bibbyfinancialservices.com/funding/invoice-finance-products/invoice-discounting

 

Alternative business loans: What are your options?

Growing your business often requires funding – perhaps you want to tender for a new contract, but you need to know in advance if you can get the funding to fulfil it. You’re considering alternative business loans because: 

  • You can’t get the level of funding you need to grow from your business bank, or the interest rates are too high. 
  • You want to avoid being locked into a long-term, inflexible loan for several years, which can be hard to adjust as your needs change.
  • You don’t want to wait weeks for a decision on a loan application, and you want to know upfront if you need to provide a personal guarantee. 
  • It’s hard to find funding providers that cater to businesses in Ireland.

In this article, we’ll look at some alternatives to business loans: revenue based finance, peer-to-peer lending, line of credit facilities, and invoice discounting. We’ll cover:

If you’re ready to start a conversation with us about how we can fund your business, get in touch with us now. 

Revenue based finance: funding based on your recurring monthly revenue

In simple terms, if your capital is tied up in long-term contracts, revenue based financing gives you an advance on these funds.

Revenue based financing works by releasing liquidity from your company’s recurring revenue, both contracted and non-contracted. Contracted revenue is recurring income with a formal agreement in place, such as a management contract for a building, while non-contracted revenue includes income from sources like e-commerce. 

You can use the funding to cover operating expenses, deliver new contracts, or expand your business. If you have capital tied up in future subscriptions – for example, in platforms like Shopify or Stripe – revenue based financing offers the funding you need to continue growing your business.

Your projected cash flow determines your funding level, so the amount you can use is based on your monthly revenue streams. This offers you more flexibility than small business loans from traditional lenders (such as banks), which can be challenging to adjust.

Revenue based financing is well-suited to SMEs that:

  • Have reliable recurring revenue
  • Don’t have blue-chip debtors
  • Have a subscription model or contracted revenue 
  • Are in a period of growth
  • Have a turnover of €1 million or more
  • Don’t want additional debt and don’t want to give away equity

Revenue based financing is great in situations where:

  • You want to grow your business, but you need an injection of capital– perhaps to hire skilled personnel for a contract, purchase a large amount of stock, or upgrade premises.
  • You’ve secured a contract with lengthy payment terms, such as a government contract. 
  • Your business has ongoing contracts, with others about to start and more you’d like to tender for.

If your company doesn’t have tangible assets but does have customers and recurring revenue, revenue based financing could be an excellent option for your business. Revenue based finance works particularly well for subscription-based businesses or SaaS companies.

For an in-depth look at this funding method and eligibility, see our article: Revenue based financing: What it is and how to get started

Revenue based financing providers in Ireland

Financefair is the only provider of revenue based financing in Ireland. 

Peer-to-peer (P2P) lending: borrowing from other businesses and investors

With P2P business lending, businesses get loans from investors or other businesses instead of traditional financial institutions like banks. P2P platforms check the creditworthiness of potential borrowers by looking at their financial statements, business plan, and credit scores.

It’s often easier and quicker for borrowing businesses to apply for P2P lending than a traditional bank loan. You can access funds for various reasons, like business opportunities and managing cash flow. 

P2P lending isn’t without its disadvantages. You get a fixed amount of funding, as with a small business loan from your bank. That’s in contrast to other alternative loan options, such as revenue based finance, which gives you access to future recurring revenues in your business each month. This funding can increase as your business grows.

P2P lenders in Ireland 

There are a few options for P2P lenders in Ireland. The best-known provider is Linked Finance, who offer loans ranging from €10,000 to €500,000 with terms of up to 5 years.¹

Invoice discounting: use existing contracts to fund new ones

Invoice discounting – also known as invoice financing – allows you to unlock liquidity in your business by leveraging your customer book. This means you can use the contracts you already have to fund new ones, providing quick access to cash without the extended commitment of a term loan. 

There are two types of invoice discounting: 

  • Full book: You finance all of your invoices.
  • Selective: You choose which of your invoices to finance.

Depending on the provider you choose, you may then have the choice of:

  • Undisclosed or confidential invoice discounting: Your customers are unaware it’s happening. You manage your invoices and the payments from your customers. Some prefer this type of invoice discounting, as it allows you to remain in control of your customer interactions.
  • Disclosed or non-confidential invoice discounting: Your customers know you’re using invoice discounting. The funding provider can impose this on a business if they feel the perceived risk is high enough. 

Invoice factoring is a form of disclosed invoice finance in which the provider essentially takes over the borrowing company’s credit control, which is less risky for the provider. 

This is how invoice discounting works:

  1. You generate an invoice.
  2. Provider sends the pre-agreed advance amount: This is a percentage of the total invoice value (for example, up to 90%).
  3. The customer pays the invoice amount into a separate account managed by the invoice discounting provider. If you have a disclosed facility, your customer will be aware of the provider’s involvement, but for undisclosed facilities, they’ll assume they’re paying you.
  4. Provider sends the remainder of the invoice minus any fees.

To read more about this type of funding, see our article: Invoice discounting: How to get started

Invoice discounting providers in Ireland

The following providers offer invoice discounting in Ireland:

  1. Financefair: Choose between selective or full book invoice discounting with an advance of up to 90% of the invoice value. You apply for and manage your facility online, and the funds will be in your account within 24 hours of approval. Financefair’s pricing model is transparent, featuring only three fees (you can find out more about these in the article above). Try our calculator to get an idea of the cost of invoice discounting.
  2. AIB: Provides full book invoice discounting, offering an advance of up to 85% of the invoice value. You can manage it online.²
  3. Bank of Ireland: Offers full book invoice discounting with an advance of up to 85% of the invoice value, typically for invoices that have been outstanding for up to 90 days.³
  4. Close Brothers: Provides full book invoice discounting and invoice factoring, offering an advance of up to 90% of invoice value.⁴
  5. Bibby: Offers full book invoice discounting and invoice factoring, with full online management of your facility.⁵

These providers may offer disclosed and undisclosed invoice discounting depending on your company’s perceived risk. While banks generally offer disclosed facilities, Financefair always provides undisclosed invoice financing, so your customers are unaware you’re funding your business with invoice discounting.

Line of credit: draw down funds when you need them

A business line of credit operates similarly to a digital overdraft, providing businesses with funding of €10,000 to €250,000 a year. This funding solution ensures capital is available when you need it, and you’ll only pay interest on what you use.

When you need access to the funds, you send a request to your provider, who transfers it into your business bank account.

The key benefits of a line of credit include being able to:

  • Effectively manage large payments for items such as inventory or staffing.
  • Work with providers other than your business bank, allowing you greater flexibility. This is also handy if you’ve not had your business bank account for very long, as banks often won’t fund businesses with new bank accounts.
  • Choose your repayment terms, whether that’s monthly or as a lump sum. After 12 months, you can opt to continue or close the facility.
  • Fund seasonal expenses that occur infrequently during the year.
  • Avoid diverting customer payments to a separate account – with a line of credit, the funds are deposited straight into your business bank account.

Line of credit providers in Ireland

Line of credit facilities for businesses are rare in Ireland. AIB is the only bank offering their customers a line of credit.⁶ Financefair is the only provider offering a standalone facility, and it won’t impact any current financing you have with your business bank. 

A line of credit is our quickest funding option to set up. Within 24 hours of setting you up on the platform, your funding will be ready for you to draw down. 

How to get started with Financefair

Our application process is simple. Here’s a quick guide to getting started:

  1. Apply: Fill out an application form or get in touch with us to schedule a chat with one of our team.
  2. Connect: Integrate your banking and accounting software and share some essential documents with us: your latest statutory financial statement (such as your tax return), business forecasts, and tax clearance certificate.
  3. Offer: You’ll get an indicative offer within 24 hours.
  4. Onboard: If you’re happy with the offer, our team will guide you through the onboarding process for our platform.
  5. Formal offer: When your credit is approved, we’ll send your formal offer as well as:
    1. A DocuSign link for the debenture
    2. A link to set up an account with GoCardless, which is how we collect our fees
    3. Security documentation for Anti-Money Laundering (AML) and Know Your Customer (KYC) 
  6. Funding: Once we’ve set your facility up, you can access your funding within 24 hours.

Why choose Financefair for your business finance?

Established in 2015 by finance and accounting professionals in Ireland, Financefair (formerly InvoiceFair) are dedicated to providing Irish businesses with tailored working capital solutions for growth.

We offer a range of funding options to support you, including revenue based financing, business line of credit facilities, invoice discounting, and selective invoice finance

When you choose Financefair for your business funding, you can:

Find out how much funding we can offer in one business day

We know it’s vital for you to find out as quickly as possible if your business is eligible for funding – and if it is, how much is available. This is why we make sure that you’ll get your indicative offer within one business day. Once you’ve accepted and have been onboarded onto the platform, you’ll be able to access your funding within 24 hours.  

We combine a team with decades of experience in financial services with data analytics to assess, approve, and monitor risk: giving you a speedy decision. 

Fund your business goals with frictionless, established solutions 

We don’t just set up your funding facility and leave you to it – we’re always available to help you assess your business needs. Together we’ll consider your current requirements, as well as where you want to take your business in the long term. We also know how important flexibility is, so we make it easy to switch to another funding solution if your needs change in the future. 

Here’s what else you should know about our financing products:

  • Our funding limits are flexible: We know that you’ll probably need more funding as your business grows, but we also understand that working capital ebbs and flows. If you’re a revenue-based finance customer, this means that if you have a quieter month and take less revenue, we can reduce your funding rather than withdrawing it completely.
  • We never require personal guarantees: As a small business owner, you don’t want to put your home and personal assets at risk. As long as you meet our eligibility, we’ll never ask for a personal guarantee. 
  • Our pricing is transparent: No hidden fees will crop up later on – you’ll know from the outset exactly what the cost is. 
  • You don’t need blue chip debtors to get funding from Financefair: If your business has a subscription or recurring revenue model, it can be difficult to secure funding from a bank. Our alternative finance options, like revenue based financing, can grow your subscription or recurring revenue business.

Grow your business with funding from Financefair

In this article, we’ve looked at some of the funding options that might be appropriate if you’re looking for alternative business loans, along with the providers who offer them. 

There’s a funding solution to fit the requirements of most growing businesses, whether it’s a line of credit, revenue based finance, P2P lending, or invoice discounting. 

To get started with Financefair funding, reach out to us today.

 

Sources:

¹https://www.linkedfinance.com/start-lending/
²https://aib.ie/business/loans-and-finance/finance/invoice-finance
³https://businessbanking.bankofireland.com/credit/finance/invoice-finance/features-and-benefits/
⁴https://www.closeinvoice.co.uk/
⁵https://www.bibbyfinancialservices.ie/
⁶https://aib.ie/business/loans-and-finance/finance/credit-line

Selective invoice discounting: How it works and how to get started

If you’re an SME looking for information on selective invoice discounting, you might have one or more of the following issues in mind:

  • You only want to finance a few of your largest invoices to help grow your business. You might have a lot of smaller contracts alongside a few larger ones, and don’t want the extra admin that comes with financing all your invoices.
  • You’re familiar with invoice discounting but you’ve heard about hidden fees. The fact that you might not know up front exactly what you’ll pay makes you reluctant to try it.
  • You’re looking for funding that’s quick and easy to set up and manage. 
  • You aren’t sure if invoice discounting is the right funding solution for your business needs –  but you do know you don’t want to commit to a longer-term solution like a business loan.

In this article, we’ll look at selective invoice discounting in detail, including:

If you already know you want to try selective invoice discounting with Financefair, reach out to us to get started. 

How selective invoice discounting works

Invoice discounting – also known as invoice financing – is a funding solution that’s widely available in Ireland. It allows you to use your sales ledger to get a cash advance on customer invoices. We’re the only invoice discounting provider in Ireland that can offer you a choice between:

  • Full book invoice discounting: You raise your entire sales ledger. This is more operationally intensive but costs slightly less than selective. 
  • Selective invoice discounting: You choose specific invoices to finance – you can raise your largest invoices and leave out smaller contracts. Selective invoice discounting might be ideal for you if a small proportion of your customers make up the largest portion of your revenue each month. In this situation, financing every invoice (including those that are for relatively small amounts) would be operationally intensive for a small business. 

Invoice discounting can also either be:

  • Disclosed: Your customers will know you are using invoice financing. A common form of disclosed invoice financing is ‘invoice factoring’.  This is where the lender takes on an operational role in the business, taking over credit control processes: this means your customers will pay their invoices to the invoice factoring company, and take care of any late payments or unpaid finances.
  • Undisclosed: Your customers won’t be aware you’re using invoice financing. All Financefair invoice discounting facilities are undisclosed. This is also known as confidential invoice financing. Selective invoice financing with Financefair is always undisclosed, offering complete discretion. 

With selective invoice financing, there’s no tie-in. Your facility is available for you to use when you need it, and you choose which invoices to finance and when to do it.

How much does selective invoice discounting cost? 

The cost of funding with Financefair typically ranges from 0.75% to 1.50% per 30 days, depending on the product type, term, credit quality, and several other factors. 

Selective invoice discounting typically costs slightly more than the full book option. When you apply for funding and get your offer from us, it will include the total cost. This comprises three fees: 

  • The annual platform fee: A fixed fee that’s charged on the total facility provided.
  • A transaction fee: This is a percentage of the receivable funded.
  • Discount charge: This is payable on the amount of funding used in a 30-day period and is linked to your credit score. The discount is greater the higher your credit score is. 

Here are some examples of what an ID facility with Financefair might cost, comparing selective with full book:

Amount advanced Cost per 30 days (selective) Cost per 30 days (full book)
€180,000 €2,250 €1,800
€450,000 €5,625 €4,500
€810,000 €10,125 €8,100

Use the calculator on our selective invoice discounting page to get an idea of how much it would cost for you.

How to get started with Financefair

We can finance individual invoices from €30,000 and provide up to €50m in annual funding if your company meets our criteria: 

  • You’re a limited company and have two or more directors
  • You’ve been in business for three years or more
  • Your minimum annual turnover is €3m
  • You have an average debtor book of at least €500,000

Getting started with Financefair selective invoice discounting is easy:

  1. Apply: To get started with us, you can:
    1. Get in touch with us directly to discuss your funding requirements. Call +35315252486, email busdev@financefair.com, or book an appointment with us, and we’ll tell you if we can offer funding to your company.
    2. Complete a funding application form, which just takes a few minutes.
  2. Offer: You’ll get an indicative offer in one business day.
  3. Onboard: The next step is to run the required KYC and AML identity checks and onboard you onto the platform, which the team will help with. 
  4. Funding: When your facility is open, upload your invoices onto our platform. Once they’re verified, we’ll advance up to 90% of the value of the invoice to your bank account within 24 hours.

Why choose Financefair for selective invoice discounting?

Founded in 2015 by a team of accounting and finance professionals, Financefair (initially called InvoiceFair) provides flexible tailored working capital solutions that help ambitious businesses grow faster. 

This includes funding options like revenue based financing, line of credit, and both full book and selective invoice discounting – and we’re the only provider of selective invoice discounting in Ireland. 

So why should you choose Financefair to grow your business?

Save time on admin and get flexible, hassle-free funding

Many invoice discounting companies need you to upload information to your account daily at a particular time, plus your bank statements each week. This creates a lot of admin that can be a drain on resources. 

With Financefair, the technology in our platform means there’s no need to upload information manually – we can fund your account automatically. This saves you and your team time and energy that can be better spent growing the business.

Access different kinds of growth funding through our platform

As part of the application and onboarding process, we’ll speak with you to understand your business, immediate needs, and future growth plans. We’ll also use data analytics to get an accurate understanding of your circumstances and funding requirements. 

The support doesn’t end once your initial funding is approved and your facility is set up. Going forward, we’ll work together to review your funding regularly, using our industry knowledge and decades of financial services experience to make sure you have the best finance solution for your business needs. 

As well as selective invoice discounting, we also offer other business finance products – all of which are off balance sheet and require no personal guarantee. These include:

  • Revenue based finance: Use up to 20% of your future annual recurring revenue for access to upfront capital. 
  • Line of credit: Like an online overdraft that isn’t attached to a bank account, a line of credit lets you access up to €250,000 instant working capital when you need it.

You also have the option of starting with selective invoice discounting and moving to full book if it would work better for you. 

We know it can be tricky to get funding from banks if you have a subscription or recurring revenue model, as they often only want to fund businesses with blue-chip debtors. But as long as you meet our eligibility criteria, we can finance these different business models. 

How selective invoice financing closed a cash flow gap in a multi-million euro contract

Meritcom, a leading data and telecommunication services provider, has operated for over 20 years. 

The company won a multi-million euro contract with a social media company to provide sub-contracting services for a large-scale data centre project in Denmark. Meritcom was to provide highly skilled workers for services such as power and electrical works during the build phase of the data centre site expansion. 

As the project ramped up, the labour requirement increased, along with the working capital requirements. The repayments from the primary contractor were on a 30-day payment term cycle, but Meritcom paid their staff weekly, which created a cash flow gap.

Meritcom needed a cash flow strategy that would cover the initial set-up costs of the project before they received any payments from the primary contractor. We took our time to understand the business’s working capital needs and ultimately suggested selective invoice financing. 

This solution allowed Meritcom to leverage 70% of the purchase order in the initial set-up phase to assist with the capital costs at the start of the project and 90% of completed worksheets to provide working capital as the project moved through the design and build phases.

Find out more in our case study on Meritcom.

Decide what invoices to fund and when with Financefair selective invoice discounting

In this article, we’ve taken a deep dive into selective invoice discounting, looking at how it works and how you can get started with us at Financefair, the only finance provider of selective invoice discounting in Ireland. 

We’ve also seen how selective invoice discounting was the ideal solution to close a cash flow gap in a big contract, where there was the need for an initial outlay to get set up before any payments came in, plus weekly payments to workers going forward. 

If you could benefit from the option to finance some of your invoices as and when you need to, reach out to us today to get started.

No personal guarantee business loans: What you need to know

If you’re looking for no personal guarantee business loans, you might relate to the following difficulties: 

  • While personal guarantees are standard in business financing, it means your personal assets – like your home – are on the line. You might have had a bad experience with personal guarantees in the past.
  • You likely want to know if you’ll require a personal guarantee upfront, instead of going through a loan application first.
  • There aren’t many lenders that offer loans without a personal guarantee in Ireland. 
  • You might want to tender for a new contract, but you need to know you have the funding available to deliver. Ideally, you want a business loan that doesn’t require a personal guarantee and will still give you enough funding. 
  • You want to avoid getting locked into a traditional bank loan that may not suit your business in a few months.

This article will look at what a no personal guarantee business loan is, plus some alternatives that might work better for your business. We’ll cover:

To speak to the team about our funding options – all of which don’t require a personal guaranteereach out to us today. 

How to get a no personal guarantee business loan

A no personal guarantee loan means you don’t need to use any personal assets such as your home or car as collateral. 

Personal guarantees are often the standard in business financing, so finding an appropriate loan option can be difficult – especially if you’re a new business or a start-up.

If a lender does offer you a loan without a personal guarantee, they might offer you a smaller amount of funding than you’d like and potentially higher interest rates. This is because the lender’s perceived risk is higher as they don’t have any of your assets as security.

However, this type of loan agreement can have a serious impact on a small business owner’s life. When you use your own assets as collateral for a loan agreement, you’re introducing something personal into your business life. This means that if you’re unable to repay the loan, your personal items and relationships – which ought to be separate from your business assets – are impacted. 

If you’re researching this topic, you might have already tried talking to your bank to see if you’re eligible for a no personal guarantee business loan. If you were, chances are you would have been offered less financing than you’d like. Frustratingly, it can be difficult to tell if you’ll be required to give a personal guarantee before you go through the application process.

At Financefair, we don’t offer traditional business loans, but we do offer several finance options that may be a better fit for your business. We’ve included information on those solutions in this table, alongside the main providers of secured and unsecured business loans in Ireland: 

Financefair Bank of Ireland¹ AIB² PTSB³ Linked Finance Grid Santiago
Personal guarantee required? No May be required No information on website No information on website Yes No information on website No information on website
Minimum finance amount €50,000 for line of credit and selective invoice financing €1,000 No information on website  €5,000 €10,000 €10,000 €10,000
Maximum finance amount €1,000,000 for revenue based finance and invoice discounting For loans over €120,000, speak to your relationship manager For loans over €300,000, speak to your relationship manager No information on website €500,000 €500,000 €500,000
Terms Flexible: depends on funding solution.  Unsecured loan terms of up to 7 years, secured loan terms not on website No information on website Up to 10 years Up to 5 years Up to 12 months No information on website
Can you apply online? Yes You can apply online for loans up to €120,000 Download the application form available online for loans up to €300,000 and return it to your branch or relationship manager No, call or go into your local branch Yes Yes Yes

Alternatives to no personal guarantee business loans

A no personal guarantee business loan is a good option for you if you want a term loan with consistent repaymentswithout putting your personal assets on the line. It also keeps your business credit history separate. If your business defaults, your personal credit score and creditworthiness won’t be damaged.

But there are also other financing alternatives that also don’t require a personal guarantee.

Here are three no personal guarantee financing options

1. Revenue based financing

Revenue based financing allows you to use your company’s existing recurring revenue – both contracted and non-contracted – to release working capital. Revenue based finance often doesn’t require a personal guarantee because it’s a more innovative type of funding than a typical small business loan. At Financefair, we never ask for a personal guarantee or a guarantor.  

With revenue based finance, you can get an advance on a percentage of the funds associated with subscriptions and long-term contracts. You’re then able to use that capital as you see fit – whether that’s fulfilling a new contract, growing your company, or paying day-to-day expenses. We’ll convert up to 20% of your annual recurring revenue into growth capital. 

Your funding amount is directly related to your cash flow projections and monthly revenue, which means it can grow as your business grows. Compared to a standard business loan, it’s much more flexible as the loan amount isn’t fixed. 

This type of financing is a great option for companies that have recurring revenue but no tangible assets, such as those with a subscription business model. It’s also a good option for those who want to be able to adjust their funding as their annual revenue grows. 

This is what Zeus Scooters did, using revenue based finance through Financefair to buy the scooters needed to expand into new territories. Read more in our case study on Zeus Scooters.

For more about how this type of funding works, see our article: Revenue based financing: What it is and how to get started.

2. Line of credit

A business line of credit is very similar to an overdraft. There are two providers in Ireland: AIB and Financefair. AIB can offer a credit line to customers with a business account, but they state on their website that they may need security (such as a personal guarantee).

Financefair is the only provider in Ireland that can offer a standalone line of credit without a personal guarantee

When you have a line of credit, the funds are available to draw down when you need them. All you need to do is request funds, and your provider will send the money directly to your business bank account

With a line of credit, you can:

  • Easily pay off seasonal business expenses that you might not have the money for, or payments for labour costs or stock that are larger than average
  • Work with other providers besides your business bank, as you’d have to with an overdraft. This is helpful if you haven’t had your business bank account for long, as many banks require a certain amount of time between opening your account and requesting financing. 
  • Set your own terms for drawing down and repaying the funds – as a lump sum or monthly. 
  • Review your line of credit after the initial 12 months are up. You might choose to close the facility or leave it open to cover any unexpected expenses. 

For more in-depth information on credit lines, see our article: Online business line of credit: Everything you need to know to get started

3. Invoice discounting

With invoice discounting, you’ll get an advance on your invoices to turn your existing contracts into working capital to finance new projects. Depending on which provider you choose, it’s possible to get invoice discounting without a personal guarantee. However, providers don’t state on their website that they require a personal guarantee: you might not know until you apply. 

Also known as invoice financing, this type of funding is a good option if you’re looking for quick access to cash without committing to a longer-term business loan. 

There are three types of invoice discounting:

  • Full book: You finance up to 90% of the value of all your invoices. 
  • Selective: You finance up to 90% of the value of some of your invoices, usually your largest contracts.
  • Invoice factoring: With this kind of invoice discounting, you finance all your invoices, but the lender takes over credit control for you. 

Invoice discounting facilities are either:

  • Disclosed: This means your customers are aware you’re using invoice discounting. Invoice factoring is always disclosed. 
  • Undisclosed: Your customers remain unaware. This is the type of invoice discounting that Financefair offers.  

We recently worked with energy solutions provider Work Work, and provided them with a  used selective invoice financing facility. They had to fund weekly stock purchases and labour costs, but their invoice payment terms were for 60 days. 

By using selective invoice financing, Work Work was able to get an advance on 90% of the invoice amount on selected invoices. This meant that the company could continue to grow without having to wait for the invoice to be paid. 

For more information on invoice financing and how it might be a good option for your business, read our article: Invoice discounting: How to get started

Why choose Financefair for your business financing?

Financefair, founded in 2015 as InvoiceFair, provides innovative funding solutions to growing businesses. We offer revenue based finance, online business line of credit, and both full book and selective invoice discounting. 

We’re the only provider in Ireland that can offer a standalone line of credit and selective invoice discounting.

Here are a few reasons to work with Financefair: 

Get business funding without a personal guarantee

At Financefair, we don’t require a personal guarantee from the business owner for any of our funding solutions. This is because we base our decisions on real-time accounting and banking data and take the time to speak with you to fully understand your business needs and growth plans. This gives us the information we need to understand the potential risk.  

Because we can offer a variety of finance products, it’s easier for us to find a solution that’s a good fit for your company’s needs, and we’ll work with you and your finances to do that. We’ll also review your needs regularly to ensure you’ve got the best business financing solution for your needs. Once you get started with Financefair, it’s easy to adjust your funding as your business evolves. 

Here are some other important details to know about our products:

  • Our funding limits are flexible: As your business grows, so can your funding limits. We know working capital isn’t static, and it can ebb and flow. If your revenue is lower than expected one month, we can discuss reducing your funding – rather than stopping it altogether. 
  • Our pricing is transparent: You’ll know up front exactly what you’ll pay when you choose Financefair funding, as we have no hidden fees or costs.
  • You don’t have to have blue chip debtors to work with us: It’s sometimes a struggle for small business owners with a subscription or recurring revenue model to find funding from banks. But because we offer revenue based finance, we can help companies with these business models. 

Get an indicative offer in one business day

When you apply for funding, you want to know as soon as possible if you’ve been approved, and if you can get the amount you need. Assuming you meet our eligibility criteria, we can give you an indicative offer in one business day

When you accept our offer and send us the documentation we need, we’ll work with you to set you up on our platform as soon as possible. When the application and onboarding process is complete, we’ll set up your facility within 24 hours so you can access your funding.

We can do this thanks to the decades of financial services experience our team has. Combining this with the data analytics in our platform, we’re able to accurately assess and monitor risk. This means we can move quickly and get you the decision you need. 

Finance your business without the need for a personal guarantee

In this article we’ve taken a look at what a no personal guarantee business loan is, along with some other more flexible alternatives that might work better depending on your situation and type of business– revenue based finance, line of credit and invoice discounting.

If you’re ready to discuss your funding needs with our experienced team, get in touch with us today to start the conversation. 

Sources

¹https://businessbanking.bankofireland.com/credit/business-loans/business-loan/ 

²https://aib.ie/business/loans-and-finance/loans-up-to-60k and https://aib.ie/business/loans-and-finance/loans-from-60001-300k

³ https://www.ptsb.ie/business-banking/term-loans/

https://www.linkedfinance.com/business-financing/ and https://www.linkedfinance.com/borrower-faqs/

https://www.gridfinance.ie/short_term_loans and https://www.gridfinance.ie/help_centre/faqs

⁷https://santiagosme.ie/about/faq

Invoice finance providers: which one is right for you?

If you’re researching invoice finance providers, you might relate to one of these struggles:

  • You aren’t sure if invoice finance is the right solution for you, and you want to know more about what the different providers can offer.
  • You’re interested in trying invoice finance, but the offered advance rate was lower than you’d like, so you want an easy way to compare providers.
  • You’ve heard about hidden costs with invoice finance, and want to pick an invoice finance provider that is transparent about their fees. 
  • You’re hesitant to dive into full-book invoice financing – you want to see what else might be a better fit. 

In this article, we’ll compare five of Ireland’s top invoice finance providers. We’ll also look at the eligibility criteria for these providers, plus the businesses they might suit best.

We’ll cover:

Note: To find out how invoice financing could help grow your business, reach out to us

What are the top invoice finance providers in Ireland? 

Invoice financing, also known as invoice discounting, is a type of business finance that lets you use your existing contracts as general working capital by getting an advance on your unpaid invoices.

These invoices might have payment terms of 30-60-90 days. Instead of waiting for your agreed payment term, invoice financing allows you to get paid for up to 90% of these outstanding invoices in 24 hours. This unlocks the liquidity in your business, and gives you near-immediate access to a cash flow that can help grow your business. 

There are three types of invoice financing:

  • Full book: You use all of your invoices to raise working capital. 
  • Selective: You only raise certain invoices (your largest contracts).
  • Invoice factoring: The finance partner essentially takes over credit control, and manages payments of invoices. This facility is sometimes given a different name to appeal to specific businesses (such as with recruitment financing products). 

The financing will either be: 

  • Disclosed: Your customers will know you are using invoice financing.
  • Undisclosed: Your customers won’t be aware of your invoice financing activity. 

For more in-depth information about how invoice financing works, see our article: Invoice discounting: How to get started.

Here’s a comparison of the top invoice finance providers in Ireland: 

Financefair AIB¹ Bank of Ireland² Bibby³ Close Brothers⁴
Products offered Full book and selective invoice financing Full book invoice financing Full book invoice financing Full book invoice financing and invoice factoring Full book invoice financing and invoice factoring
Maximum advance rate 90% of the invoice value 85% of the invoice value 85% of the invoice value  100% of the invoice value 90% of the invoice value 
Is the facility disclosed or undisclosed? Undisclosed Could be either, but more likely to be disclosed Could be either, but more likely to be disclosed Invoice finance is undisclosed, invoice factoring is disclosed Invoice finance is undisclosed, invoice factoring is disclosed
Cost per 30 days 0.75% to 1.50% Exact figure not stated on website Exact figure not stated on website  Exact figure not stated on website Exact figure not stated on website. Fees relating to your account are disclosed when your facility is arranged
Maximum facility size €1,000,000 Not stated on website Not stated on website Not stated on website Not stated on website
How quickly can you access funding? When your facility is in place, funding will be in your bank account within 24 hours Instant access to the agreed advance amount for new invoices Instant access to the agreed advance amount for new invoices When your facility is in place, funding will be in your bank account within 24 hours Instant access to the agreed advance amount for new invoices
Can you apply and manage your facility online? Yes, the entire process is online Can manage it online but you’ll need to apply in branch or with your Relationship Manager. You can email to get started Can manage it online but you’ll need to apply in branch or with your Relationship Manager. You can email to get started Yes Yes
Is a personal guarantee required? No Not stated on website  Not stated on website Not stated on website Not stated on website
Who qualifies?
  • Limited company with at least two directors
  • Trading for at least three years
  • Minimum annual turnover is €3m
  • Average debtor book is at least €500,000
  • Have an average on-going funding requirement of at least €150,000
  • Sell goods or services on credit to other businesses
  • Your ongoing trade debtor’s ledger is a minimum of €250,000
  • Invoice after goods and services are delivered
  • Have a satisfactory quality and spread of debtors
  • Use a sales ledger accounting system and appropriate credit control procedures
  • Sell on credit to business customers
  • Have a good spread of debtors
  • Growth potential
  • Good credit control
  • Provide goods and/or services to other businesses
  • Issue your customers with credit terms of between 30 and 90 days
  • Have strong credit management and control reporting tools
  • Can demonstrate a capable management team
  • Have been financially viable for a minimum of six months
  • Invoices are business to business
  • Minimum annual turnover is £750k
  • You want to finance all of your invoices, not just a few

 

Why choose Financefair as your invoice financing?

Financefair has provided Irish businesses with the working capital solutions they need to grow since 2015. In addition to invoice financing, we offer revenue-based financing and line of credit

Here’s what it means when you choose Financefair for your invoice financing: 

You can choose to fund just one invoice if you prefer 

When you choose Financefair for invoice financing, you have the option of either selective or full book. Selective invoice discounting allows you to get an advance on a select number of invoices, rather than your whole debtor book. This allows you to test invoice financing before making a large commitment. We are the only provider of selective invoice financing in Ireland.

Selective invoice financing could be right for your business if:

  • You’re a small business, and don’t have the operational resources to raise all of your invoices for invoice financing.
  • You have a few larger contracts and many small ones. The smaller invoices might not make a difference to growing your business.

Full book invoice financing might be a better option if: 

  • You’re a larger business with many significant invoices, and you want to finance all of them. 
  • You have a larger team and have the operational resources to manage full book. 

For an example of how selective invoicing helped a business grow, see our case study on how a company used their approved worksheets to expand in Europe.

You won’t find our fees confusing

Our pricing structure is simple. You’ll pay three fees:

  1. An annual platform or facility fee: This fee is fixed and we’ll charge you based on the facility limit provided.
  2. A discount or interest charge: This fee relates to how much funding you use in any 30-day period and depends on your credit score. The higher your credit score is, the lower your interest rate.
  3. A transaction fee or monthly service fee: This is a percentage of the overall invoice finance facility approved.

Our all-in cost of funding through our platform typically ranges from 0.75% to 1.50% per 30 days, depending on the product type, term and credit quality. 

To get an idea of how much an invoice finance facility would cost your business, try our calculators for full book invoice discounting and selective invoice finance

Who is Financefair good for?

Financefair is good for businesses who want:

  • An undisclosed facility: You manage your own invoices, and your customer won’t know you’re using an invoice financing company. Many SMEs prefer this approach, as it allows you to remain discreet..
  • To apply for and manage their facility online: You can apply to Financefair entirely online. Our platform means you can manage your facility online and upload your invoices directly.
  • The option to swap to a different form of financing: We want to see your company succeed and grow. As your business grows, we can help ensure you’re using the right financing option for your business needs – whether that’s invoice financing, revenue based financing, or line of credit. Once you’re part of our community, swapping products is simple.
  • Flexible funding limits: We know working capital can ebb and flow. For example, say you were using our revenue based financing facility. If you had a quieter quarter than expected with less revenue coming in, we can discuss reducing your funding rather than stopping it completely.
  • Funding with no personal guarantee: This means you don’t need to put your personal assets, like your home, at risk.
  • Funding without having blue-chip debtors: If you have a subscription or recurring revenue model, it can be tricky to get a business loan from the bank, which often only fund businesses with blue-chip debtors. Financefair can fund different business models, including a subscription-based model, using facilities such as revenue based financing

How to start financing your invoices with Financefair

To be eligible for Financefair invoice financing, you must:

  • Be a limited company with at least two directors
  • Have been trading for at least three years
  • Turnover at least €3m annually 
  • Have an average debtor book of at least €500,000

We can finance single invoices from €30,000 and provide up to €50m in annual funding if your company meets our criteria. It’s easy to get started:

  1. Apply: To apply for funding you can:
    a. Contact us directly to discuss your requirements with one of our team, who can quickly let you know if we can fund your business. Call +35315252486, email busdev@financefair.com, or book an appointment with us.
    b. Complete a funding application form. Submit it online, and our team will get in touch with you ASAP. 
  2. Offer: Within 24 hours of getting in touch, you’ll get an indicative offer.
  3. Onboard: If you accept our offer, we’ll run the necessary KYC and AML identity checks and onboard you onto the platform. 
  4. Funding: When your facility is in place, funding will be in your bank account within 24 hours.

Other invoice finance providers in Ireland

Financefair isn’t the only invoice financing provider in Ireland. Let’s take a closer look at some of the other options available to businesses in Ireland. 

AIB¹ 

AIB is a financial services group that operates in Ireland and the UK, offering banking and other services to personal, business, and corporate customers.

The eligibility criteria for invoice finance with AIB is:

  • Your ongoing funding need is at least €150,000, on average
  • You sell goods or services on credit to other businesses
  • Your ongoing trade debtor’s ledger is a minimum of €250,000
  • You invoice after goods and services are delivered
  • The quality and spread of debtors are ‘satisfactory’
  • You use a sales ledger accounting system and appropriate credit control procedures

AIB is suitable for businesses who: 

  • Want their funding from a more familiar source
  • Are happy to finance all their invoices

Bank of Ireland² 

Bank of Ireland offers a range of banking and other financial services to SMEs.

The eligibility criteria for invoice finance with Bank of Ireland are:

  • You sell on credit to business customers
  • You have a good spread of debtors
  • Your business has growth potential
  • Your credit control is good

Bank of Ireland is suitable for businesses who:

  • Want their funding from a more traditional source
  • Are happy to finance all their invoices

Bibby³

Bibby Financial Services offers SMEs a variety of funding options, including invoice finance and invoice factoring. 

The eligibility criteria for invoice finance with Bibby are:

  • You provide goods and/or services to other businesses
  • Your customers have credit terms of between 30 and 90 days
  • You have strong credit management 
  • You have a capable management team 
  • You’ve been financially viable for a minimum of six months

Bibby is suitable for businesses who: 

  • Are happy to finance all their invoices
  • Prefer invoice factoring over invoice financing 
  • Want to apply for and manage their facility online

Close Brothers

Close Brothers offers a range of funding solutions for Irish businesses.

The eligibility criteria for invoice finance with Close Brothers are:

  • Your invoices are business to business
  • Your business has a minimum turnover of £750k p.a
  • You’re interested in financing all of your invoices, not just a few

Close Brothers is good for businesses who: 

  • Have a large number of high-ticket invoices
  • Might prefer invoice factoring instead of invoice financing
  • Want to apply for and manage their facility online

What to consider when choosing an invoice finance provider

When you’re making a decision on invoice finance providers, there are a few things to keep in mind:

The advance rate: What is the ideal advance rate for your business? Many businesses are glad to be approved by an invoice financing provider only to discover that their advance rate is 65% rather than the expected 90%. A low advance rate leads to a situation where you’re still struggling to get the capital required and therefore defeats the purpose of getting financing in the first place. At Financefair, we offer up to a 90% advance rate.

Cost: It can be difficult to work out the cost of invoice financing with some providers, so it’s important to calculate the true cost rather than just going off the headline rate. It can also be difficult to make an apples to apples comparison since each provider will charge fees differently. Make sure you fully understand what the cost of funding for each provider will be.

Do you want full book ID or selective? With full book invoice financing, you finance all of your invoices. This costs slightly less than selective invoice financing, but it can be operationally intensive, particularly if you’re a smaller business.

Selective invoice financing allows you to finance only your highest invoices, significantly reducing the admin time. It also allows you to test invoice financing before committing your entire debtor book. Financefair is currently the only provider of selective invoice financing in Ireland. 

The type of debtors you have: If your revenue is non-contracted revenue or from subscriptions, invoice financing might not be the best fit. Other options like revenue based financing or line of credit might be more appropriate.

Not sure what type of financing would be right for your business? Get in touch with our team to learn more. 

Grow your business with Financefair invoice financing

In this article, we’ve compared the main invoice finance providers in Ireland, to make it easier to choose the right one for your business. We’ve also looked at why you might choose Financefair, plus the main eligibility criteria for a number of other providers.

Ready to explore invoice financing options for your business? Contact Financefair today to discover how we can help you grow your business. 

Sources

¹https://aib.ie/business/loans-and-finance/finance/invoice-finance
²https://businessbanking.bankofireland.com/credit/finance/invoice-finance/how-does-it-work/3
³https://www.bibbyfinancialservices.com/funding/invoice-finance-products and    https://www.bibbyfinancialservices.com/funding/invoice-finance-products/invoice-discounting
⁴https://www.closeinvoice.co.uk/invoice-discounting, https://www.closeinvoice.co.uk/how-our-fees-work and https://www.closeinvoice.co.uk/invoice-finance