TP24 secures $585 million from Barclays

Funds will help Australian businesses grow, says director

TP24 secures $585 million from Barclays

TP24 has closed a $585 million debt funding deal with British investment bank Barclays, of which $200 million has been allocated to supporting Australian small businesses to grow.

The fintech lender, which provides flexible revolving credit based on the value of outstanding invoices, said that it had allocated $100m to its Australian business, with a further $100m accessible as growth requires. The remaining $385m has been allocated across its businesses in the  UK and the Netherlands.

TP24 Australia managing director Adam Lane (pictured above) said that TP24  was created to help small businesses to grow, export and create jobs.

“Our customers are our reason for being, and with this round of funding we can bring global best practices to Australian businesses at a significantly larger scale, which is especially important in the current environment,” Lane said.

He told MPA that having the backing of Barclays provided capacity for the business to “scale significantly” in the Australian market, enabling it to help more SMEs with their working capital needs.

“They’re funding us with anything up to $200 million worth of financing, which we can then extend to Australian small businesses,” Lane said.

Noting the significance of the deal to TP24 and to the Australian market, Lane acknowledged that  Barclays was able to gain exposure to developments happening Down Under.

Barclays director of securitised products Gordon Beck said that Barclays was pleased to support TP24 on its mission to provide innovative lending solutions to SMEs across Australia, the UK, and the Netherlands.

“Progressive SME lending is critical to the health and success of many businesses, and TP24’s solutions are tailored, affordable, and convenient,” Beck said. “Barclays is proud to be partnering with TP24 as it leads this innovation on a global stage.”

TP24 provides SMEs with revolving lines of credit of between $200,000 and $4m, calculated against the value of their receivables. To date, it has provided over $88m in capital to SMEs with an annual turnover of $1m to $50m.

Working capital provided by TP24 has helped to support businesses spanning a vast array of industries including critical infrastructure, wholesale trade, export, manufacturing and software, the company said.

Current climate ‘tough’ for businesses

Lane said that inflationary pressures, rising interest rates and supply chain issues meant a “tough time” for businesses.

“Businesses that can’t or don’t control their input costs, if they can’t pass on those costs further down the value chain, it’s a struggle,” he said.

Lane said that TP24 typically worked with businesses that didn’t want to raise capital through equity, and many businesses had found equity markets a challenge.

Currently, TP24 is helping an increasing number of listed and private businesses use debt to fund their growth, he said.  Typically, those businesses have a sound business model and want to increase the velocity of their growth by way of funding on future revenues.

“Their margins are in the right place, but they need to leverage their future income to grow at a quicker rate,” Lane said.

Receivables-backed finance solution unique in market

Finance is secured against trade receivables in a sophisticated insurance-wrapped securitisation structure, meaning business owners don’t need to leverage personal assets, such as their home or vehicles, Lane said.

While TP24 uses receivables as collateral, it doesn’t control the cash flow of its customers, Lane said.

“If a product is taken from another financier, they will obligate the business owner to have all invoices paid into an account that is controlled by the financier,” Lane said.

Customers don’t need to change their bank accounts and operational processes, and TP24 uses technology to oversee business performance, he said.

“A knock-on effect of that is if they’re controlling their cash, they’re borrowing from us what they need and within complete visibility of the cash  flows in their business and therefore not incurring unnecessary cost,” Lane said.

What challenges are Australia’s small businesses experiencing and are you seeing increased demand for finance to fund business growth?  Share your thoughts in the comments section below.