Alternative funding for SMEs other than bank lending has grown in importance since the squeeze arising from the financial crash, and a seminar conducted by law firm Eversheds and accounting and advisory firm Crowe Horwath surveyed the new financing landscape which has emerged.

The seminar, in the Royal College of Physicians in Dublin, heard from Michael McCambridge, CEO of McCambridge Bread, who described his experience from the 2007-08 period to date in terms of accessing funding necessary to maintain his business. All presentations are available to download here.

McCambridge told the audience that the company, which was established in Ireland in 1945, experienced trading difficulties from 2009 to 2012, a period when access to funding had become a major issue for most SMEs. McCambridge Bread had already refinanced in 2007-2008, and found it difficult to access further funding from the banking sector.

Even though the market began to ease in 2012, the new financial environment drove the business to seek funding from a wider base than bank debt, and it is now accessing finance from a range of sources including mezzanine finance and invoice discounting, alongside traditional banking sources.

Eversheds partner David O’Beirne outlined some of the changes that have taken place in the funding market since 2008.

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“The conditions for SMEs seeking to access funding for their businesses changed considerably in the wake of the crash," said O'Beirne. "SMEs need to be aware of the increased focus and emphasis on issues such as cash flow and corporate governance,  security and transaction documentation, extended transaction timelines, more restricted use of personal guarantees and additional transaction costs.

“Emerging legal challenges for SMEs include changes brought about by the Companies Act 2014, the requirement to co-ordinate advisers, and securing agreement on priorities among the parties involved.”

Gerard O’Reilly of Crowe Horwath commented: “During the recession, companies were enormously challenged because of the lack of access to finance from the banks. Business owners had to become more resourceful in sourcing funding from other sources such as equity finance, invoice discounting and mezzanine finance.

“While access to senior debt from the banks has become somewhat more available again, SMEs need to be aware that there is still a need to deploy other funding mechanisms to grow their businesses in the recovery period, and that there is range of options available to them.”

Photo (l-r): David O’Beirne, Naoise Cosgrove (Crowe Horwath), Michael McCambridge and Gerard O’Reilly. (Pic: Marc O’Sullivan)