The Interface Financial Group (IFG)

The Interface Financial Group (IFG)

August 05, 2011 11:40 ET

SME Businesses Turn to Plastic for Funding

Sharp Rise in Owners Using Credit Cards for Funding is Alarming

BIRMINGHAM, WEST MIDLANDS--(Marketwire - Aug. 5, 2011) -

Editors Note: There is a photo associated with this press release.

The Interface Financial Group (IFG), North American largest alternative funding source for small businesses, announced that the company offers support to small businesses that are struggling with raising capital to fund growth prior to economic recovery. IFG provides short-term financial resources including debtor factoring, invoice discounting and invoice factoring to companies in the UK, Ireland, United States, Canada, Australia, New Zealand, and Singapore.

As we have learned in recent news Project Merlin is falling short of the lending objectives required of it for the SME community. We are now informed that SMEs are turning to high risk forms of finance such as credit cards and loans from friends and family to keep their business on track! This information was revealed in a Trends Index report from a UK commercial finance broker.

The six-monthly survey showed that credit cards currently rank among the top two external sources of SME finance, with 42% of respondents admitting to using them. This is a slight decrease (of 2%) on November 2010 figures but still represents a worrying over-reliance on high cost funding. Bank overdrafts remain the most popular external funding option for SMEs, with 44% of respondents using this method over the past six months, although this too is slightly down from 49% recorded in the previous survey.

Loans from family and friends were also used widely, with 20% relying on the generosity of loved ones as a business lifeline, despite the economic growth recorded in the first quarter of 2011. There was also alarming evidence that many SMEs were failing to fully explore other viable funding opportunities such as invoice discounting or factoring. Only a quarter of respondents (25%) are currently using asset finance and even fewer (21%) are using invoice finance (factoring & invoice discounting).

The overwhelming use of credit cards and family loans carry greater risks and leave businesses more susceptible to the pressures of the economic climate.

Paul Barnsley, chief operating officer for The Interface Financial Group (IFG) said: "businesses should evaluate their funding alternatives and find a suitable partner to work with. It is not a wise move to expose their business to huge risks just to give them a quick fix cash injection. Whilst it is understandable that owners or managers will feel more comfortable turning to friends and family they trust or indeed the familiarity of a credit card, these forms of funding don't account for the long-term impact, which is often overlooked when dealing with the day-to-day realities and pressures."

"What is required here is funding that is tailored to suit the individual business' requirements, providing flexibility when it's most needed, and a known cost from the outset, this way it can be budgeted for and built into the cashflow plan for the business.

Evidence has shown that businesses that use invoice factoring or debt factoring finance are feeling more confident and are financially stronger than those who do not; therefore it should be something that businesses should not ignore.

About The Interface Financial Group (

The Interface Financial Group (IFG)provides short-term financial resources including invoice factoring (invoice discounting). IFG launched the UK operation in 2010 following the success of its New Zealand, and Australia businesses which launched in 2004, and 2006. IFG's innovative products also includes spot factoring – the purchase of a single invoice or number of invoices. IFG does not require the whole debtor book.

The IFG Network is the funding arm of The Interface Financial Group providing capital and transactional support to IFG's international office network. IFG has grown to over (150) international offices in the UK, the United States, Canada, Ireland, Australia, New Zealand, and Singapore. Each IFG office is managed on a local level, providing immediate service to clients with local knowledge and experience. This makes IFG unique to all other Factoring Companies in the UK. The IFG team has substantial business experience and expertise in numerous diverse areas, including accounting, finance, law, marketing, banking, etc.

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