Lloyds Bank Commercial Finance review: invoice finance and asset based lending

Lloyds Bank Commercial Finance is the invoice finance and asset based lending arm of one of the UK's biggest banking groups. It helps businesses that sell on credit turn unpaid invoices into cash, and supports larger companies with facilities secured on a wider mix of assets. This page covers those working capital products. If you are after a standard Lloyds term loan, see our separate guide to Lloyds business loans. You can read more on Lloyds Bank Commercial Finance's own website.

Smart Funding Solutions is an independent broker and is not part of Lloyds. Lloyds Bank Commercial Finance is one of the lenders on our panel, so we can compare its invoice finance with banks and specialist factors across the market.

01About Lloyds Bank Commercial Finance

Lloyds Bank Commercial Finance Ltd sits within Lloyds Banking Group. According to Lloyds, invoice finance facilities may be provided by Lloyds Bank Commercial Finance, Lloyds Bank plc or Bank of Scotland plc, while asset based lending and debtor protection are provided by Lloyds Bank Commercial Finance Ltd or Lloyds Bank plc.

One point that surprises many people: Lloyds says you do not have to bank with Lloyds to apply for invoice finance. Existing customers may find it convenient to keep everything in one place, but a business banking elsewhere can still be considered.

02What Lloyds Bank Commercial Finance funds

With both invoice discounting and factoring, Lloyds says it can advance up to 90 per cent of the value of your invoices, and that it can fund UK and overseas debts in a range of currencies. That makes it relevant to exporters as well as businesses selling at home.

Lloyds describes invoice discounting as its main invoice finance product. Discounting suits businesses with established credit control, because your customers continue to pay you and need not know a facility is in place. Factoring suits smaller or faster growing firms that would benefit from Lloyds' team chasing payments. Our pages on invoice discounting and invoice factoring explain the difference in more detail.

Lloyds also provides asset finance, such as hire purchase and vehicle finance, through separate Lloyds Bank asset finance teams. We can compare those with other asset finance lenders too.

03Who Lloyds Bank Commercial Finance suits (and who it may not)

Lloyds invoice finance is most likely to fit a business that:

• Sells to other businesses on credit terms, rather than to consumers.
• Turns over at least £100,000 a year, the minimum Lloyds states.
• Keeps its books on accounting software, another Lloyds requirement.
• Has a spread of creditworthy customers and clean, well documented invoices.
• Wants the backing of a large bank, perhaps alongside other banking products.

It may be less suitable if:

• You trade mainly with consumers or take payment upfront, as there are no invoices to fund.
• You only want to fund one or two invoices occasionally. A specialist selective invoice finance provider may be more flexible.
• Your sales ledger is complex, for example construction contracts with stage payments and retentions, which some specialist factors handle more readily.
• You want asset based lending but turn over less than £10 million.

Lloyds also provides asset finance, such as hire purchase and vehicle finance, through separate Lloyds Bank asset finance teams.

04What Lloyds Bank Commercial Finance looks at

Lloyds sets out three basic eligibility points: you sell to other businesses on credit, turnover is at least £100,000 a year, and you use accounting software. Beyond that, an invoice finance provider will typically review:

• An aged debtors and aged creditors report.
• Your customer list, including concentration, meaning how much of the ledger sits with your largest customers.
• Sample invoices and contracts or terms of trade.
• Recent management accounts and the last filed accounts.
• Your credit control process and history of bad debts or disputes.

Expect a provider to audit the ledger before going live and periodically afterwards. Facilities of this kind usually take a charge over the company's debts, and directors may be asked for warranties or guarantees depending on the case.

05Pros and cons

Pros

• Backed by a major UK banking group.
• Confidential invoice discounting available.
• Advances of up to 90 per cent of invoice value.
• Funds overseas debts in a range of currencies.
• No need to move your banking to Lloyds.
• A route into asset based lending as the business grows.

Cons

• Minimum turnover of £100,000 rules out the smallest businesses.
• Bank processes can be slower and more document heavy than some specialists.
• Asset based lending is reserved for businesses turning over above £10 million.
• Complex or concentrated ledgers may sit better with a specialist factor.

06Applying through a broker vs going direct

Invoice finance agreements look similar on the surface but differ in the detail: the advance rate, how disputed invoices are treated, minimum terms, notice periods and the services bundled in. Going straight to your bank, or any single provider, gives you one version of those terms.

We search the market, including high street banks and independent factors, and put your case to the providers that suit your ledger. That means one set of information from you and a clear comparison of the offers that come back. It is free to enquire; any broker fee is disclosed separately before you proceed.

Use our Instant Quotes tool to compare lenders in minutes.

07Alternatives to Lloyds Bank Commercial Finance

• Bibby Financial Services: a long established independent invoice finance specialist, often worth comparing for smaller businesses and sector specific ledgers.
• Barclays invoice finance: the closest high street comparison if you want a bank backed facility.
• Ultimate Finance: an independent provider offering a range of invoice and asset based facilities, useful where a bank's criteria are a tight fit.

For a wider view of the options, start with our invoice finance hub, or read our guide to asset based lending if you have significant stock, plant or property alongside your debtor book.