Due to a combination of European targets and public enthusiasm for environmentally friendly approaches to waste management, nobody seriously doubts the government’s commitment to recycling more of our waste.
Whilst progress over the last decade in this area has been impressive, much more needs to be done.
Herein lies a problem though because in spite of this apparently fertile business environment, some companies are experiencing serious difficulties in obtaining funding for recycling and waste management projects.
Although many of us by now are tired of talking about the subject, the fact is that the economic crisis of 2008-2012 have changed our society – and possibly forever.
One of the biggest changes arising is the transformation of the commercial lending culture. In fairness, some of that had started before 2008 but the crisis accelerated a trend towards lending that’s:
- risk averse;
- short-term in the sense of demanding fast returns;
- much more rigid in terms of approval thresholds and qualifying conditions.
Predictably, some recycling and waste management organisations find it difficult to obtain funding as a result.
That’s because their businesses often have a long ramp-up before investment starts generating a return. It’s also the case that some of the latest cutting-edge technology associated with certain forms of waste management might not be entirely proven and to some extent that requires a leap of faith on the part of investors and lenders.
Today the approach of simply going in to a single random lender brandishing a “big ask” business proposition, is no longer typically yielding results.
There is now far more emphasis on:
- expert intervention and intermediation;
- diversity of approach to funding.
Let’s consider what those two things mean.
Intervention and intermediation
If you’re a specialist in waste recycling and management solutions, it’s probably unlikely that you’re also a wired-in expert in the UK’s lending markets.
That matters because some lenders might simply be far more receptive to propositions in your business area than others. Not only that, some may be more receptive at certain times than others, subject to variables such as their budgets and total financial exposures etc.
The idea of using expert market intervention is that you will be talking to specialist funding facilitators and intermediaries who know all those lenders who might be receptive to the types of projects you’re discussing and when.
This can be simply expressed as saying that there’s little point in wasting your time talking to lenders who, by definition, are not likely to be interested what you have to say.
Diversity of approach
Lenders in the current market are likely to welcome propositions which share or offload elements of the risk. That requires innovative thinking.
They may be particularly interested in evidence that you have considered and obtained other methods of funding at least part of what you require to reach your goals. For example, rather than seeking a single cheque for the large scale outright purchase of multiple plant items, it might be more appropriate to seek a combination of lease financing, hire purchase and also outright purchase.
This is what is meant by diversity of approach and it is a significant departure from earlier generation “can I have a big cheque please” approaches to funding requests.
A bright future
The revised European Waste Framework Directive demands that EU member states recycle a minimum of 70% of all waste generated by the year 2020. Whatever the Brexit detail, it seems unlikely that the UK government will move away from this target.
There is a considerable opportunity for companies operating in the recycling and waste management arena. With some assistance and lateral thinking, funding roadblocks should be overcome.