Reward for small businesses as lender’s operating profits hit record

Finance lender Reward said it will provide more funding to small businesses after announcing record annual profits.

The Leeds-based firm, which is cashing in on the reluctance of banks to lend to small businesses, said operating profit soared by 55 per cent to £3.1m in the year to the end of February. Revenues rose from £3m to £4.3m.

Reward currently has £18m of funds to lend, up from £2m two years ago, and it promised it will lend more than £18m this year following the firm’s strong performance.

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Since the start of the new financial year in March, Reward has completed 22 transactions, a record number of deals for a single quarter.

In April 80 jobs were saved at Rawcliffes, the school uniform supplier which has stores in Bradford, Dewsbury, Harrogate, Huddersfield and Leeds, after the group’s management bought 
27 shops with backing from Reward.

The lender stepped in to support the management buyout after administrators were appointed.

Over the past few months Reward, backed by South African billionaire Christo Wiese, has expanded into the North West with the launch of an office in Manchester and the recruitment of financier Neil McGivern.

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Mr Wiese said Reward is being boosted by increased confidence in the UK economy. “Market conditions continued to favour Reward, especially in the case of the short-term loan facilities offered by Reward Capital – which has little direct competition – as such funding remains difficult to obtain from high street banks,” said Mr Wiese.

“With the appointment of several key executives to bolster Reward’s expansion plans in the new financial year we expect the business to further build on its excellent performance in the 2014 reporting period.”

Dave Jones and Tom Flannery, the two partners who run short-term asset backed lender Reward Capital alongside invoice finance provider Reward Commercial Finance, said they are planning further growth, including the introduction of new product lines.

“We are taking advantage of the banking sector’s increasing apathy towards business overdrafts, historically the cornerstone of any business’s short-term funding needs,” said Mr Jones. “SMEs are continuing to look to alternative sources of funding. It’s fair to say that for the majority of businesses, being able to obtain an overdraft is now very much a thing of the past.

Mr Flannery said he sees further opportunities as businesses look for alternative sources of funding to the mainstream banking sector.

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