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Mike Underwood | Increased demand for alternative sources of finance

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In January, we announced a partnership with Adsum, a specialist in providing short-term financing based on monetising business’ tax receivables. Now, users of our app can access funds secured against their R&D tax claim.

Mike Underwood, Head of Origination at Adsum, here gives us some thoughts on why there has been an increase in demand for alternative sources of finance.

Traditionally the short term lending model was dominated by high street banks and the securitisation model, who were not able to serve the interests of borrowers that required quick and efficient liquidity solutions to support their short-term cash flow requirements. This is particularly true of loss making businesses, including early stage and perhaps R&D-intensive businesses, who with limited or no assets and cash tied up in business growth are simply not effectively served by traditional models.

However, there are now a whole range of new lenders that have thrived in a macro-economic climate, including Adsum, supported by a diverse range of funding sources.

In 2018, the short term lending market was around £4bn in size, and that attracts innovative solutions to the problems that SMEs face on a daily basis with regards to cash flow and funding. Solutions include advance funding on tax receivables such as R&D, VAT and CITC, which when coupled with advances in technology, gives SME’s a much wider and quicker funding options than traditional bank products. 

Adsum invests heavily in our tech and our people to make sure that our customers have the best possible service and experience when dealing with us. The combination of our tech and the partnership with WhisperClaims gives us an opportunity to support the market with rapid turnaround times on loans secured against an R&D tax receivable.

Ultimately this is a win-win for our customers as we see the majority of loans being re-invested into more R&D, to improve existing products or create innovative new ones. In turn, this creates more R&D tax credits and as a result, we are able to provide a larger cash advance for our customers when they come back to us for another loan.

Mike Underwood is Head of Origination at Adsum and will be speaking on our upcoming webinar “Using R&D tax claims as security for short-term loans” on Thursday, 24th Feb at 12.30. Tickets are free, with plenty of spaces open!

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