Market Invoice Small Business Lending.

Hi Magenta

Thanks for posting this. I'm interested in invoice-based financing as an investor. I like the opportunity to diversify a lending portfolio away from unsecured consumer lending and property, and the credit risk management that can come with this type of financing. I have projects ongoing on Archover, which I like - they are very transparent with their information and offer an initial investment size of £1K per loan, which enables you to spread your pot. Most of the loans (the "secured and insured" type) also have credit insurance and are secured on invoices. There is cash drag to consider - if you invest in a 12 month loan, in practice you wait about 1 month to get the loan filled up and then drawn down. As the market grows and becomes more liquid, I expect this is become less of an issue however.

Personally speaking I would be very keen on seeing other investment opportunities in this area, as long as lenders keep their minimum investment requirements to £1k or less or loan.

I don't think invoice-based financing is attractive or viable for some SMEs however. They may prefer to seek finance based on other assets or director guarantees as it could be cheaper, or they may not have the invoice flow and quality to make this type of financing work. For example, an SME might not a lot of one-off projects on their books and not much contracted multi-year revenue coming in. So I'm not sure what the impact on existing providers will be.

Hope this helps. I'd be very to see what other people think.

M