A new €45 million fund has been unveiled for businesses that can't wait to get paid

IRELAND’S STATE-BACKED SME financier has recruited a new partner to provide lower-cost funding to cash-strapped businesses.

The Strategic Banking Corporation of Ireland (SBCI) will pair with Bibby Financial Services Ireland for a new, €45 million invoice financing pool.

Invoice financing is when a business effectively on-sells its own invoices to a third-party fund, which provides up-front payment to the company which made the sale.

That process can provide a much faster flow of cash to a business as there is no need for it to wait for invoices to be paid, although it will sacrifice some of the invoice value to the finance provider in fees.

Bibby Financial Services Ireland will be the first invoice-financing firm to partner with the SBCI, which was set up to provide cheaper funding to Irish SMEs.

The two organisations said the deal would enable firms to “access favourable rates” for Bibby’s invoice financing option, and the funding was available immediately.

The SBCI recently released figures which showed its loans were an average of 1.5 percentage points below market rates.

Local SMEs have in recent years been paying the highest interest rates in the EU, with access to funding also highlighted as a major stumbling block for firms. Businesses in Ireland are also more dependent on bank finance than in most countries across the European bloc.

An SME stimulus

Bibby Financial Services international CEO Steve Box said the deal with the SBCI would “act as a stimulus to the Irish economy”.

“At a time when there is some uncertainty in markets across Europe, the most basic support that SMEs need to grow and scale-up their businesses is access to finance,” he said.

Bibby is the seventh on-lender to partner with the SBCI, which was set up with funds from the European Investment Bank, Germany’s state-owned development bank and the Irish Strategic Investment Fund.

As of the end of last year, €172 million in funding had gone to around 46,000 SMEs using finance provided by the SBCI.