Once a company has completed its insolvency process, most business owners wish to start again, having learnt the mistakes they have made in the past with a new trading vehicle, a common question is can you get invoice finance post liquidation or administration?
This should now marks a new beginning in their business life. Post liquidation finance can deliver a number of different types of business finance for businesses which are technically a new start business ignorer for them to get cash flow up and running again to ensure the business has the best change of surviving.
If you can’t meet your financial obligations you may have no option other than liquidation, but invoice finance could be a way out of the mess.
Late payment is one of the largest threats to the survival of any SME. Over 65% of small business fail within their first five years of trading. Business failure should not always be the end of the journey, with the right finance in place, hopefully this time it will be a successful out come for you.
Is it possible to get finance after liquidation?
When a company is insolvent, this means that they are unable to pay their debts. In the UK, if a company is insolvent, they may choose to go through a process called liquidation. This involves selling off all of the company’s assets in order to pay their debts. Once a company is in liquidation, it is very difficult for them to obtain finance.
This is because lenders see the company as being a high risk and are unlikely to want to lend them any money. However, there are some specialist lenders who may be willing to lend to companies after liquidation has taken place. These lenders will typically charge higher interest rates than normal in order to offset the risk that they are taking on.
What is a Pre-Pack Administration?
A prepack administration is an insolvency procedure that is used for a connected party or third party to buy the assets and the business. A pre-pack administration involves the sale of some or all business assets prior to the appointment of an administrator.
The difference between a pre-pack administration and a conventional administration is that the sale of the business and its assets has already been sold before the administration.
Type of Post Liquidation Business Finance
Invoice Factoring
Invoice factoring post liquidation is a type of invoice finance facility when a business sells its invoice to a factoring company. This type of business finance allows a business to release cash from their unpaid invoices and leverage the value of their sales ledger.
A lender will look at how reliable those clients have been in the past, whether they think they can rely on the invoice being paid and how long the payment terms might be. If they decide to go ahead, they will advance you a proportion of the invoice total – such as 75%. When the invoice is eventually paid, they will return the balance to you minus their fee.
Due to starting again under a new company vehicle, this new company will not have any credit history. Invoice Factoring uses your customers credit ratings to get a fixed credit score, making it a perfect funding solution.
One downside is that you need to trade with other businesses, so you cannot using this type of finance to fund consumers.
Business Loan
Business loans for companies are are restarting after a liquidation or administration are a little more harder to come by, as stated above you are trading under a new corporate vehicle, as such you will be classed as a new start.
Lenders will be looking for personal guarantees or some form of security from directors to cover the loan should they have an appetite to lend.
Bridging Loan
A bridging loan for a company that has entered liquidation and now requires short term finance is a form of advance to be uses against a property, a bridging lender will require security on a property to lend for this type of finance
Invoice Finance Pre-insolvency
Every year, thousands of companies are forced into liquidation because of a cashflow crisis. Maybe it’s because of large unforeseen bills; perhaps it’s an issue with late payments. Either way, if a business finds itself unable to cover its liabilities, it faces the prospect of liquidation unless it can find cash fast.
If your business faces the prospect of insolvency, you’ll have to ask yourself two searching questions. Firstly, is it possible to find an injection of short-term capital to save the company? If so, is the company worth being saved? For this, you will need to feel confident that this is a viable going concern.
Many businesses on the brink of insolvency are perfectly viable. A cash flow shortage can happen to any small business – even one which appears to be in robust health. The work may be flowing into the company and you may be run off your feet fulfilling orders, but that won’t mean the money is coming into your account quickly enough to meet your liabilities.
Apply for Post Liquidation funding
Should you have started to trade again following on from a liquidation or pre pack administration and have worries you may not be able to raise finance, we are here to help.
We have dealt with every event and ensured we could secure funding for their restart businesses. If your company would like a quotation for restart funding simply complete the online enquiry.
Read more: Has your client gone bust?
FAQ’s
How easy is it to get Invoice Factoring after Insolvency
It is very easy, most insolvency's have a story, be honest is the most important factor. The new businesses credit rating will not be strong, but Invoice Factoring relies on your customers credit ratings to fund.
Is Security Required for Invoice Factoring?
Most lenders will require a personal guarantee, this means there are no charges over your home.
Seasoned professional with a strong passion for the world of business finance. With over twenty years of dedicated experience in the field, my journey into the world of business finance began with a relentless curiosity for understanding the intricate workings of financial systems.