Expertly Put is a series of exclusive conversations with industry experts, designed to help business owners and management teams gain a deeper understanding of the topics that matter most. This month, Stuart Fitzgerald sat down with Mark O’Rourke, MD of Bibby Financial Services, to discuss to discuss the Irish non-bank lending market.

Bibby Financial Services is part of an eco-system of non-bank SME lenders that has emerged in Ireland over the last 20-years. The broadening of the SME lending base has been supported by The Strategic Banking Corporation of Ireland and has helped to bring increased competition and credit solutions to the market.

The business case for companies like Bibby Financial Services is obvious, and the expansion of these businesses is a nod to the maturation of Ireland Inc.

In early November 2024 I met Bibby Financial Service’s Irish MD, Mark O’Rourke, to discuss the Irish non-bank lending market.

I began by asking him if he expected the non-bank lending sector to make the impact that it has, when Bibby Financial Services opened its Irish office 19-years ago.

Mark O’Rourke: No, I didn’t to be completely honest. When Bibby Financial Services started, the non-bank funding landscape was still in its infancy. Back then, SMEs were very dependent on the traditional banks, and there weren’t as many alternative options. However, as time went on, the demand for non-bank funding solutions grew, largely because SMEs found it harder to access the financing they needed from traditional lenders.

Now, Bibby Financial Services is, on average, facilitating over €1m a week in new funding limits, and this is in addition to the millions in weekly payments to existing clients. This is supporting businesses with a turnover ranging from €750,000+ across a variety of sectors including Manufacturing, Wholesale, Recruitment, Construction, Transport and Haulage, Food and Beverage, as well as business services. This has been some transformation for the sector.

Stuart Fitzgerald: One would assume the sector is very different now as a result of these new entrants and the macro challenges that lenders faced post-Lehman.

MO: It’s fundamentally different. We’ve seen the sector evolve tremendously, with new models emerging, including asset-based lending, invoice discounting, and peer-to-peer lending, just to name a few. What’s really exciting is that these new options offer more flexibility, allowing SMEs to find financing solutions that truly match their needs. These options can be used for a range of activities such as providing businesses with increased liquidity to manage day-to-day cash flow, or assist with bigger growth aspirations such as management buyouts, mergers or acquisitions, without taking on long-term debt.

A significant change worth noting is that businesses are now using a mix of funding solutions to finance their growth ambitions. Instead of taking out a loan to finance a transaction, which involves hefty repayments over a period of time, business owners can now look to fund growth or M&A activity through a hybrid mix of funding.

It’s been great to be part of this transformation, but, looking back,even I didn’t fully appreciate the depth and breadth the non-bank sector would eventually offer.

SF: That transformation can only be good for borrowers and the lending market generally as there’s a real benefit to having credit risk more evenly distributed across a range of lenders. What’s next for non-bank lending in Ireland? Do you think the sector is positioned for continued growth?

MO: Absolutely. Ireland has a robust economy, and the SME sector plays a huge role in that. I believe non-bank funding will continue to thrive, although it might not grow in the explosive way it has in recent years. The big shift will be in how funding is accessed. Non-bank lenders are increasingly relying on digital platforms, which allow us to offer quicker, more tailored services to SMEs. However, unlike the traditional banks, we also ensure that if our clients want to engage with us on the telephone or face to face when it suits them, they can absolutely do this. The personal touch is extremely important to us when it comes to customer engagement.

Looking ahead, I think SME owners and managers are more knowledgeable than ever about alternative funding, and this trend will continue. That said, it’s also important that lenders remain flexible and responsive to the changing needs of the SME sector. For example, we are finding that many customers are engaging in expansion via M&A, MBI and MBO activity, as well as a range of other growth scenarios such as moving premises or investing in infrastructure, equipment, succession planning, machinery and Research and Development. This is a significant change from previous years, when most of the demand for funding related to working capital and cashflow for the day-to-day running of businesses.

What’s clear is that this recent shift to alternative funding options to fuel M&A and overall growth aspirations indicates that there’s an increasing requirement for more collaboration across traditional banks and independent financial providers to ensure we are learning from each other and, more importantly, are able to offer businesses a wider spectrum of funding options.

As long as the focus stays on providing solutions that work for businesses, I see non-bank funding continuing to fill a vital gap in the market.

SF: I agree that the sophistication of our SME community has increased significantly over the last 20-years. However, taking on leverage can be daunting, regardless of how sophisticated you are. What advice would you give to business owners who are raising debt?

MO: The most important thing is to understand the cash flow of the business. Before seeking external funding, you need to have a solid grasp of your financial position. Are you looking to finance a specific asset, or do you need funds to manage day-to-day operations? Knowing the answer to these questions helps determine the best type of funding for your business.

SF: And whether debt is appropriate in the first place.

MO: Agreed. I’d also say, don’t get discouraged if traditional banks turn you down. There are a wide range of non-bank options available now, whether it’s asset finance, invoice discounting, or even funding through newer platforms. It’s essential to shop around, ask questions, and understand the terms and costs of each option to find the best fit for your needs.

SF: It’s great to have so many options but I’d imagine it’s probably little overwhelming for the average SME owner. How can they be sure they are choosing the right lending solution?

MO: The key is to align the funding product with the specific business needs. If you need to purchase machinery or equipment, asset finance is a smart choice because it’s secured against the asset itself, offering better terms. For managing cash flow and handling unpaid invoices, invoice discounting is ideal because it allows you to access the value of your receivables immediately rather than waiting 60 or even 90 days for customers to pay.

The right funding depends entirely on the situation. I’d also caution business owners to be clear about the terms of any deal they enter into. Non-bank funding can be more flexible than traditional loans, but that doesn’t mean the terms aren’t important. SMEs need to ensure they’re fully aware of the costs and conditions attached to any financing option they consider.

SF: Makes sense. So, what makes the non-bank lending channel different to traditional banking credit?

MO: Non-bank lenders are more willing to understand the unique challenges faced by SMEs, which often don’t meet the criteria set by banks. For instance, banks typically want to see years of consistent profitability before extending credit, but non-bank lenders may look more closely at a business’s potential and current cash flow.

For an SME looking to scale, flexibility is essential. As businesses grow, their financial needs evolve, and non-bank lenders can adapt to those changes quicker – and often more willingly – than traditional banks..

SF: You’ve seen a lot of change over the last 19-years. What has been the key to your success in what is a very a competitive sector?

MO: For us, it’s always been about focusing on the needs of the SME and providing exceptional customer service. When we started, we didn’t just offer funding; we aimed to be a trusted partner for the businesses we worked with. Over the years, as the industry has become more competitive, that focus on customer service has become even more important.

We’ve grown because we truly understand the challenges SMEs face, and we continue to offer innovative funding solutions that help them navigate those challenges.

SF: And what’s next for Bibby? Any upcoming plans or initiatives that SME owners and managers might be interested in?

MO: We’re continuously looking for new ways to serve the SME community, and we’re always exploring new funding models to stay ahead of the curve. We’re also focusing more on digital solutions to make the application process as seamless and efficient as possible for businesses, without, of course, losing the human touch.

SF: That has to be a focus for all lenders.

MO: Absolutely. Ultimately, our goal at Bibby Financial Services is to help SMEs grow, whether they’re just starting out or are looking to expand. We’ll continue to focus on providing flexible, tailored solutions and to evolve alongside the businesses we serve.

Until next time.

Bibby Financial Services is part of a vibrant community of non-bank lenders that has developed alongside our traditional banking system in the years since the financial crash.

The SBCI maintains a list of their current funding partners. While the SBCI list doesn’t cover all players in the market, it’s a good place to start for SMEs that are considering their credit options.

See you soon for the next edition of Expertly Put.