New flexible funding offer for nursery businesses

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A new finance company has been launched to offer flexible finance to SMEs in the education sector.


Max Chmyshuk

Fleximize has just launched what it calls an ‘innovative and flexible source of funding’ which it is calling Revenue Advance. This offers repayment schedules for clients based on their revenue flow, which means it more closely fits their growth path.

The launch follows hot on the heels of criticism from MPs on the Public Accounts Committee that small and medium sized businesses in the UK are still struggling to access funding despite the Government trying to help through its Funding for Lending scheme.

Under the scheme, banks and building societies were able to borrow money cheaply from the Bank of England provided that they then loaned the money to businesses. However, latest figures from the Department of Business, Innovation and Skills, showed that net lending by banks had fallen by £2.3bn since June 2012.

Fleximize will provide credit to UK small businesses through a revenue-based financing model. Under this, companies receive funding from the company in exchange for a fixed percentage of gross revenues (typically 10–20 per cent) until a certain total amount is paid back (estimated to be 110 to 130 per cent  of the initial amount advanced to the business).

The advantage, says Fleximize, is that monthly repayments will reflect business performance rather than being an overhead cost. This is in contrast to the traditional fixed-term lending model used by banks and direct lending companies where monthly repayments are fixed and could potentially damage the finances of small businesses in months when revenues drop unexpectedly.

However, childcare businesses will need to be confident that they can repay the loan in total over the fixed period, and that their peaks and troughs will level out.

Max Chmyshuk, founder and manging partner at Fleximize said, ‘Many strong and sound businesses are finding it very difficult to secure funding from banks. Our analysis of industry data reveals that in 2007 – 2008 around 15 per cent of business overdraft applications and 9 per cent of requests for loans from SMEs in the UK, were rejected by banks. Alarmingly the corresponding figures for 2011 to 2012 were 19 per cent and 23 per cent.’

He believes that his company’s revenue-based financing solution is significantly less risky for business than other forms of more mainstream finance, usually involving fixed or regular payments.

‘Revenue-based financing is often viewed as the best of both worlds, sitting between debt and equity investment,’ he said. ‘The value of monthly repayments fluctuates with the performance of the client’s business so they pay more in good months and less in bad ones. This can be attractive for many SMEs in the education sector, particularly in the current uncertain economic climate.’

Purnima Tanuku OBE Chief Executive of National Day Nurseries Association agrees that accessing funding has been a real issue for many nurseries over recent years and we would like to see more support to help nurseries expand and grow.

She said, 'There are different ways to raise capital and with any financial undertaking we would urge nurseries to get professional advice and be sure they know exactly what they are getting into before signing a contract.

'Every business needs finance to grow and we would like to see a more level playing field when it comes to accessing Government funding. London recently received an £8m boost for its two-year-old delivery and this should be available to PVI providers and schools on equal terms.

'Nurseries are specifically designed for the youngest children to receive the specialist care and learning they need from trained early years staff. As such the PVI sector should be able to access the same funding as schools.'


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