North East businesses in urgent need of working capital should consider crowdfunding as an efficient means of financing their production, a top city fund manager says.
Investment fund manager Nicola Horlick - who was dubbed the “City superwoman” in the 1990s when she combined her high-flying finance career with bringing up six children - was in the region to promote her latest venture, Money&Co, a crowdfunding business that connects people looking for a better rate of interest on their savings with businesses seeking finance.
Speaking to The Journal, the entrepreneur said it was nonsensical to see successful companies lacking working capital to fulfil new orders and ultimately failing.
Ahead of a meeting with the North East Chamber of Commerce, Mrs Horlick highlighted the particular needs of established manufacturing and engineering business, hungry for cash to scale up production as the recovery starts to take shape in the region.
She said: “92% of loans to UK businesses still come from banks. But many companies are still struggling to get finance from the banks and need to look elsewhere, with urgency.
“There are a lot of manufacturers in the North East that need another avenue - and it’s now proven you don’t necessarily need an intermediary to get finance.”
The London-based lender has so far raised funds for a broad range of businesses throughout the country - most recently providing a £1m loan to torque test equipment Mecmesin. The Financial Times described the deal as a landmark moment in the development of crowdfunding - claiming it to be the single largest peer-to-peer loan established outside of the property industry.
Money&Co has so far closed eight loans, and has generated returns for private investors of up to 7.2%.
She added : “Naturally people are very keen on it as a means of maximising their savings. From the company side its all about speed and efficiency. We can approve a loan in under 72 hours, with only three to four pages of legal documents - written for the laymen to understand.
“Speed is very important to businesses - and not least in the North East which is performing even better than expected as the recovery sets in. The region can ill afford to have a bottleneck and needs readily available finance to support its growth.
“As North East firms begin to see an uplift in orders, it seems counter-intuitive to me that a lack of working capital will prevent them from maximising their potential - or even just staying afloat.”
Businesses need to have been trading for up to three years to qualify for Money&Co loans, which can range from £50,000 up to £3m.
To date the firm has supported manufacturers, engineering companies, food producers and other financial services outfits.