Paragon Bank review: asset finance and invoice finance for UK SMEs

Paragon Bank is a UK specialist bank, part of Paragon Banking Group, that lends to small and medium-sized businesses through asset finance and invoice finance. It is known for funding a broad mix of equipment, from fleet vehicles and construction machinery to aviation and print assets, and for taking on more structured cases. Paragon Bank is one of the lenders on our panel. As an independent broker, we can compare a Paragon proposal with the rest of the market for you. You can read more on Paragon Bank's own website.

01About Paragon Bank

Paragon Bank PLC is based in Solihull in the West Midlands and is part of Paragon Banking Group, which describes itself as a specialist banking group serving individuals and SMEs across the UK. The group is best known for its long history in buy-to-let mortgages and has expanded into specialist business lending.

Its asset finance team has said it supports businesses with complex or structured needs that high street banks will not typically accommodate. On the invoice finance side, Paragon highlights more than 18 years of experience funding businesses and offers dedicated account managers. It also says it works with the British Business Bank to provide government-backed support.

Smart Funding Solutions is an independent broker and is not part of Paragon Bank.

02What Paragon Bank funds

Product	What it is for	Typical term
Hire purchase	Buying an asset in instalments and owning it after the final payment	Up to 5 years
Finance lease	Fixed rentals, with options to return, keep leasing or sell the asset at the end	Up to 5 years
Operating lease	Lower rentals, with Paragon keeping ownership and the residual value risk	Up to 5 years
Sale and HP back	Releasing cash from equipment you already own	Up to 5 years
Business loan	Flexible borrowing alongside asset finance, secured or unsecured	Case by case
Invoice discounting and factoring	Releasing cash from unpaid invoices	Ongoing facility

A finance lease spreads the VAT across the rentals, while an operating lease protects you from the asset losing value faster than expected. Sale and HP back works like asset refinancing: Paragon buys an asset you own, advances funds, then sells it back to you on hire purchase. Paragon also offers seasonal payment options, which can help farms, tourism businesses and contractors with uneven income.

The assets it lists include business equipment, technology, construction plant, agricultural machinery, fleet vehicles, aviation, medical equipment, professional tools, print and packaging machinery and buses and coaches.

For invoice finance, Paragon says it can advance up to 95 per cent of an invoice's value as soon as you raise it. Invoice discounting is confidential and you collect from your customers; with factoring, Paragon handles collections. It also offers protection against customers failing to pay.

03Who Paragon Bank suits (and who it may not)

Paragon is aimed at UK SMEs. It is likely to suit:

• established businesses buying or refinancing equipment and vehicles
• operators in sectors such as construction, transport, print, aviation and healthcare
• businesses with seasonal income that need repayments to match
• B2B companies with a sales ledger large enough for an invoice finance facility
• businesses whose needs are a little more complex than a high street bank prefers

It may not suit a very new business with no accounts, a company looking for an asset finance term longer than five years, or a small business with only a handful of invoices each month. Directors are usually asked for personal guarantees on SME asset finance.

04What Paragon Bank looks at

Paragon does not publish a detailed checklist, but for asset finance lenders typically want:

• details of the asset, the supplier and its expected working life
• recent filed accounts and management figures
• business bank statements
• information on directors and existing finance

For invoice finance, expect to provide an aged debtors list, sample invoices and contracts, and details of your customers, payment terms and credit control. The quality and spread of your debtors matter as much as your own figures.

05Pros and cons

Pros

• A specialist bank with a wide range of asset types.
• Choice of hire purchase, finance lease, operating lease and refinance.
• Seasonal payment profiles available.
• Invoice finance with advances of up to 95 per cent and bad debt protection.
• Comfortable with more structured cases.

Cons

• Asset finance terms of up to five years are shorter than some lenders offer.
• Facility sizes and criteria are not published, so you need to ask.
• Invoice finance needs a sales ledger of reasonable size to be worthwhile.
• Personal guarantees are likely.

For invoice finance, expect to provide an aged debtors list, sample invoices and contracts, and details of your customers, payment terms and credit control.

06Applying through a broker vs going direct

Paragon works with businesses directly and through intermediaries. If you go direct, you get Paragon's view of your case and nobody else's. Asset and invoice finance terms vary noticeably between lenders, so comparing before you commit is worthwhile, particularly on larger or unusual deals.

We search the market across more than 300 lenders, including Paragon, prepare your case and approach the lenders whose appetite fits the asset or ledger. It is free to enquire; any broker fee is disclosed separately before you proceed. Our Instant Quotes tool lets you compare lenders in minutes.

07Alternatives to Paragon Bank

• Novuna: a large asset finance lender with a strong focus on green and renewable equipment.
• Aldermore: another specialist bank offering asset finance and invoice finance, worth comparing for established SMEs.
• Close Brothers: worth comparing for sector-specific asset finance or less common equipment.