Some borrowers prefer this because they can pay monthly, yearly or in lump sums. Its business credit zone may be used when necessary for a 10 monthly fee. For more ambitious finance there is venture capital, an amount usually in millions injected by specialist companies for between three and five years in return for a stake and a directorship. Venture capital investments are growing every year, though the number of transactions is falling, indicating on average bigger deals. Many companies fear this type of finance erodes their independence.
Venture capitalists say it speeds growth.
In factoring, the lender runs the invoice ledger and chases the debts, and in invoice discounting the client retains control and merely draws the finance - at a slightly lower rate. Both are favoured by businesses with low capital and high turnover. The cash is used largely as ready money to pay contract staff, freeing the company's capital for projects. The system allows companies to pay staff promptly and keep them - an important consideration during a shortage of skilled specialists. Factoring and invoice discounting now provide funds for management buyouts and buy-ins, partly because they often involve large accountancy firms keenly aware of the benefits.