"Revenue-based finance allows repayments to fluctuate with takings, offering businesses greater flexibility during quieter trading periods. This model is increasingly favored by high street businesses facing financial pressures."
"Total funding issued to food-related retail businesses rose by 42 percent year-on-year, while other small and medium-sized enterprises in the wider retail sector recorded a 34 percent increase, indicating a growing reliance on external funding."
"Economists warn that while alternative finance can help firms bridge volatility, it may also signal deeper structural pressures in parts of the UK's consumer economy, particularly in sectors with tight margins and high fixed costs."
Demand for external funding among UK high street businesses has surged due to rising costs impacting margins. Revenue-based finance usage has increased significantly, with restaurants seeing a 43% rise and pubs and bars a 39% rise in funding applications. This financing model offers flexibility in repayments, which is crucial during slower trading periods. The trend reflects pressures from inflation, energy costs, and wage increases. Analysts indicate that many businesses are relying on short-term liquidity solutions, highlighting ongoing financial stress in the sector.
Read at London Business News | Londonlovesbusiness.com
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