Cash-strapped small firms in Bradford are being targeted by a businessman who claims he has come up with a flexible and affordable alternative to bank loans.

Tony Pegg spent two years researching how banks were supporting smaller businesses before launching his United Kapital company, which he believes will transform lending to smaller companies.

The new venture aims to take on traditional bank loans and overdrafts by offering easily accessible finance to small and medium-sized enterprises, independent retailers, hospitality and the leisure sector.

Mr Pegg believes the time is right to launch his new venture as small businesses struggle to secure affordable funding.

He said: “We are confident that the United Kapital’s Cash Advance for Business will transform the UK market.

“Our product is specifically aimed at SMEs and independent retailers who continue to struggle to secure working capital from banks.”

The new scheme works by providing an advance against future credit card and debit card sales. Mr Pegg said it could provide firms with as much as £150,000 in ten days.

The funding is not based on credit scores or personal guarantees. It has flexible repayment terms tuned to the ebb and flow of a business, with an agreed percentage automatically deducted by the card processor from each card sale and forwarded to United Kapital until the advance is paid off.

Tony Pegg said: “The benefit is not only how accessible the finance is, but the flexibility of repayments.

“Repayments are aligned with the business’ performance which perfectly suits SMEs who no longer have to endure expensive monthly payments or high interest charges, and can rest assured cash flow will not be affected.”

A leading Bradford-based academic says that in the period to August, the latest available figure, bank lending to business declined by 5.4 per cent but believes the outlook for 2011 is brighter.

Mark Freeman, professor of finance at Bradford University, said the Government’s need to raise cash had ‘crowded out’ the corporate sector in the queue for funds during 2010.