Permanent TSB is moving deeper into SME banking by forming a novel partnership with invoice discounter Bibby Financial Services Ireland (BFSI) to provide non-debt funding for working capital, mergers and acquisitions, and corporate restructuring.
The referral agreement will involve BFSI offering invoice finance services to PTSB customers, allowing them to convert trade debts into cash up-front rather than waiting to be paid.
The product is designed to help finance day-to-day operations or fund growth.
"The receivables book is the biggest asset to most businesses, but they're not utilising it to the best of their ability," said Mark O'Rourke, managing director of BFSI.
"SMEs need to start reflecting on their viability and a lot of businesses need to be getting ready for what comes after the pandemic."
With average payment times having increased to more than 60 days, SMEs that supply other businesses on credit have had to wait longer for cash to come in, said Mr O'Rourke.
The deal is the first of its kind in Ireland between a bank and an invoice finance provider.
Bank of Ireland, AIB and Ulster Bank offer their own invoice discounting products to their business customers, but specialist lenders such as Bibby typically get business through brokers, client referral or direct sales.
Bibby also offers trade finance on behalf of the Strategic Banking Corporation of Ireland (SBCI), the State-backed lender.
PTSB CEO Eamonn Crowley said last year he saw Covid as an opportunity for the bank to make inroads into the SME market.
The bank, which is historically a provider of mortgages and personal banking services, did just €47m of SME business in 2019, according to accounts published a year ago.
In the first half of 2020, the bank wrote €25m in small business loans.
In November PTSB signed up to distribute €50m in new business loans as part of the Future Growth Loan Scheme, a State-backed SME lending programme 80pc guaranteed by the SBCI.
PTSB was also last month reported to be considering a bid for Ulster Bank's SME loan book, which has an estimated value of €2bn-€2.5bn, according to Davy. There are reports Ulster Bank may quit Ireland.