Praetura plans to extend its new £40m fund to all small businesses following its launch targeting solely professional services firms.

Manchester-based Praetura, whose four other divisions have lent £230m of funding to small businesses between them since 2011, launched Praetura Enterprise Finance to help fund accountants and lawyers needing both short and long-term funding.

This could range from needing to pay a tax bill or VAT to refurbishing an office or buying a longer-term piece of equipment.

Paul Slapa, commercial director of Praetura Enterprise Finance, says there is a gap in the market as professional services firms are underserved by high street banks.

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Praetura Enterprise Finance has already lent just over £2m to professional services firms over its first 10 weeks, starting with helping one North London accountant by another firm with help from a £200,000 loan.

Borrowers can arrange loans of anything between £5,000 and multimillion-pound facilities.

Loans are repaid over anything from three months to six years for an expensive piece of equipment.

The debt fund, which is backed by private investors, offers:

• Short-term working capital such as tax payments or VAT or indemnity insurance renewal for professional services firms.
• Longer-term working capital needs to cover recruitment costs or marketing expenditure, office refurbishment, IT or telephony equipment
• Buying an underlying asset like a piece of equipment

However, demand for the fund has been so strong that Slapa sees the fund being widened out to the general small business community shortly.

And although the £40m is earmarked for 2020, Slapa expects the size of the fund to at least double in 2021.

Slapa said: “We expect to deliver over and above the £40m in terms of ‘new funding’ each year, and so this is very much a starting point.”

Praetura Enterprise Finance marks the first time that the Praetura Group has approached customers directly. Usually borrowers discover Praetura through a broker’s recommendation.

Slapa said: “Traditional banks have been unwilling or unable to fill the gap of the needs of the general SME population looking for funding, which allows people like ourselves to come in and offer those business access to capital they need to invest and grow.

‘There’s a huge appetite for SMEs out there looking to borrow money’

“As a small business ourselves, we can be a little more agile. There’s a huge appetite for SMEs out there looking to borrow money.”

One of the ways Praetura can be more agile is by using technology. Slapa believes that B2B lending lags behind consumer lending when it comes to using tech to speed up decision making.

Open-banking technology is used to gain oversight of customers’ finances, while other tech solutions including e-signatures and digital ID checks, where potential borrowers can upload a selfie and AI verifies the image, are also employed.

Chester-based Praetura Enterprise Finance aims to give potential borrowers a decision within 24 hours.

“The process is simple, the application is simplified, and we’re quick to deal with. We have employed people who know the industries they’re working in very well, who understand the pain points.”

Slapa, who spent three years leading the direct lending division of Birmingham-based Wesleyan Bank, said he was very clear when he joined Praetura that he wanted customers to get a lending decision quickly and simply.

Business development directors Craig Maddox and Jon Pearson and business development manager Jonathan Fletcher support Slapa in sifting loan applications.

Said Slapa: “Lots of applications is a nice problem to have. I’m somewhat humbled by the number of people who have contacted me asking for funding. It makes the journey all the more exciting as this is clearly what people want.”

If Slapa and his team cannot help a borrower, he will then point the small business towards Praetura Group as a whole.

Slapa said: “If we can’t deliver the facility or that solution you need as a business, I’d be confident that we can help service your needs elsewhere in our group. Not only can we be simple and quick, we can think outside the box. I never want to be in a position where we turn people away.”

Further reading on business lending

MarketFinance plans to offer up to £1m in business loans