UK-based lighting firm Lumenata Lighting Design has secured its first trade finance facility from alternative financier Creative Capital after being “let down” by its bank.

The business, which designs, sells and installs lighting schemes in the UK, has received a package of short-term trade finance facilities amounting to around £130,000 for the import of lighting products from Europe and China, meant to boost its working capital and help it fulfil contracts.

“I initially approached my bank but they told me that they don’t do it, and that was the end of the conversation. We’ve been desperately let down by our bank on our invoice finance facility so we were moving to a different invoice finance company, and a contact advised me to go to Creative Capital for trade finance,” the firm’s managing director, Paul Hindle, tells GTR.

He explains that it took less than two weeks for the funds to be released, and that he will “definitely” use trade finance again in the future, most likely from Creative Capital.

Asked why Lumenata hadn’t used trade finance before that first facility, Hindle replies: “I didn’t think it was available to us – I didn’t think we were a big enough company to get involved. I was relying on my bank manager to give me that advice, and as it appears they didn’t give me the best advice they could.”

Just because [the bank] didn’t provide that service didn’t mean they couldn’t refer us to somebody who did. Paul Hindle, Lumenata

He believes banks could improve their service to SMEs by referring them to other providers when they themselves don’t have the facilities needed to support them. “They didn’t have the facility available through my particular bank, so they basically dismissed it, instead of directing us to providers who did. Just because they didn’t provide that service didn’t mean they couldn’t refer us to somebody who did. They could point us in the right direction.”

The introduction of a mandatory referral scheme between banks and alternative financiers has been a talking point in the UK for months, since it was mentioned in the Queen’s speech last year, but the idea hasn’t been turned into law yet.

Keith Bolton, director of trade finance at Creative Capital, says: “Trade finance can be overlooked by SMEs as it’s often associated with larger businesses and is rarely offered on a limited ‘one-off’ basis by established traditional lenders. We launched our facilities last year to plug that gap.”

According to the OECD, alternative funding options are a crucial part of small and medium-sized enterprises’ (SMEs’) financial toolset as credit for them remains constrained. The organisation released two reports at the end of April (Financing SMEs and Entepreneurs: An OECD Scoreboard and New approaches to SME and entrepreneurship financing: Broadening the range of instruments), which concluded that although bank lending is still SMEs’ main source of financing, it is not yet back to pre-crisis levels. In that context, the OECD pointed out that alternative instruments such as crowdfunding and factoring are gaining traction.

With a turnover of £600,000, Lumenata currently employs four people, but is planning to increase staff numbers in the coming months.