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Product update: Funding advisory done properly

Capitalise Jul 13, 2023

Since 2016, we’ve been helping small businesses access capital and protect their balance sheets.

Starting from the realisation of the bank branches closing (”Bank Manager is Dead” in 2019) to the Weekly COVID Updates and to “Leave No Business Behind”.

Most recently, we partnered with Experian to bring you the Credit Review Service, helping to protect credit scores.

There's been a fair share of challenges for small business, but we’ve always responded to their needs. 


Being efficient while helping clients

Many accounting firms helping their clients with business challenges have found offering this support has been more difficult in the face of a virtually impossible labour market and margin pressures.

Funding remains a top challenge for small business and with higher interest rates this challenge is ever greater.

But how can your firm help your clients at this time of need without spending more time? We’ve got five pointers on how we are finding firms are doing funding advisory well.

Over half of lending in 2022 was done by alternative and challenger lenders. This has led to a need for advice and discovery services for small businesses to find the right lender

For accounting firms pursuing a strategy of getting closer to clients, adding additional services and differentiating their practice, funding is likely to be a key component of charting clients to better financial health.


Five tips on doing Funding Advisory properly


Tip 1: Partner with an end to end platform

Managing a £10m MBO, restructure or mezzanine finance requires a significant amount of consultation and support. 

However for firms who either don’t have a corporate finance team or want their CF team to support smaller transactions a platform brings a huge amount of efficiency to the process.

By partnering with a platform which is end to end this bring simplicity to your firm, easy onboarding and high conversion. This means higher recovery of time costs plus team development.

Tip 2: Know their business credit scores

Credit reference agencies, such as Experian who are the prime bureau for 90% of SME lending volume in the UK, are central to a successful funding outcome.

It is both an eligibility hurdle and a factor in setting borrowing rates. When client understand their actual *consented* credit score (since that’s what lenders use) this gives guidance to your client on what they can expect and whether they might want to consider reviewing their credit score (see next tip!)

→ Use Monitor and our Capital Report to understand a client’s financial strength.

Tip 3: Alternative to borrowing and helping those declined

If your client had a 40 score (a “D”) rather than a 55 (a “C”) they would lose access to almost half the number of lenders in the market. Becoming eligible for more lenders means better choice - a better chance of success and usually better rates. 

Accounting partners offering funding advisory can contribute more recent financial statements to Experian to trigger a Credit Review for a client. Partner with a funding platform who can also help clients with poorer credit scores. 

What’s more, a Credit Review can provide an alternative to borrowing by increasing the credit limit available across suppliers - this free working capital, effectively 0% cost, for up to 30 days or even 60 days, can provide a significant opportunity for small businesses.

Request a Credit Review Service to review a client’s credit score. 


Tip 4: Affordability calculators to match want and need

The ability for a client to access a credit line rests on their free cashflow to repay the capital, yet few business owners - or client managers! - will know how to calculate affordability for a loan in line with the lenders’ typical calculations. 

You have access to tools which calculate affordability and eligibility and helps businesses understand what lenders believe they can manage. This can feed into business and cashflow plans.

Use our Funding Calculators to understand a clients affordability

Tip 5: Fast applications and instant offers

Whether your firm uses timesheets or not, in professional services, time is money. 

Use a platform which helps you to be efficient when creating a funding application and managing the responses back from lenders.

At Capitalise we have integrated the top lenders in the UK, so responses come back instantly (or very quickly!) but the streamlining of the application process is the real winner here by removing unnecessary back and forth.


Doing Funding Advisory properly

With alternative lenders supporting over half (55% according to the British Business Bank) of new SME lending in 2022, businesses need to be focused on products available from lenders outside their main bank. 

Without the bank branch, we see accountants stepping into the role to help businesses discover the products needed by their clients. 

Capitalise has been investing in helping accountants offer Funding Advisory properly for 6 years and continues to push the boundaries of SME lending. We've had almost £2 billion of funding offers approved through the platform and so we are well on our way to hitting our original vision of £5 billion. 


If you would like to help your clients with access to funding, book a call with one of the team. 

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