Sources of Finance

A common complaint from SMEs in recent years has been the lack of availability of funding to help them grow (or survive).  However, many of these SMEs simply asked only their banks for financial support and this was not always approved.  Did you know there are a considerable number of sources of finance available out there with companies keen to lend?  Let’s have a look at just some of the options available.

Bank Loans & Overdrafts

These are the most common type of funding for SMEs.  Remember you can ask other banks for loans and not just your own bank.

Loans from Commercial Lenders

Outside of the banks are commercial lenders, many of whom are actively seeking businesses to lend money to.  They usually look for ability to repay the loan rather than just asset-rich companies that traditionally provide more security for banks. 

Asset-Based Lenders

If you are an asset-rich company, such as those who have plant & machinery, asset-based lenders could be your best bet.  They will loan against the value of your assets.

Commercial Mortgages

These are available against commercial property and would be a good alternative to your bank.

Invoice Factoring

A factor will normally pay you say 85% of your invoice and then manage your sales ledger for you, collecting the money owed from your customers themselves.  If you have large and particularly blue chip clients, this could be a sensible route to investigate.

Invoice Discounting

This type of financing is a loan against an invoice or group of invoices.  You still chase payment from your customers yourselves and then use these funds to repay the amount loaned.

Business Angels & Venture Capitalists

Depending on how much funding you are seeking, business angels and venture capitalists could be a great option for you.  You would be selling a stake in your business in return for the funds and you often gain valuable business advice and contacts from your investor.  Think Dragon’s Den!

Grants

Have you checked what grants are available in your local area of for your type of business?  Contact your local Chamber of Commerce to see what grants you could be entitled to.  There are often plenty of grants available, it’s simply a case of knowing they exist.

Creditors

Your suppliers are actually a source of finance.  If they have offered you 30 day terms, ensure you take 30 days (and not a day longer!) to pay your suppliers.

Crowd-funding

If you are confident in your business plan and looking for strong growth, obtaining money from the ‘crowd’ could be a very viable option for you.  Crowd-funding is a relatively new and as yet largely unregulated area, however it is gaining much traction and providing considerable support to new and growing businesses.  Once your business plan is approved and accepted, your pitch and request for funds are placed on the crowd-funders website and a number of people can invest or lend money to your business.

Schemes to help support you

Schemes such as Growth Accelerator and Start-Up Loans are worth investigating as they offer more than just funding or the greater opportunity to achieve funding; they also come with valuable mentoring support and advice from the private sector – those who are already experienced in such matters.

This is just a taster of what is out there.  It is clear to see that funding is available from more than just your own bank! 

Do get in touch if you’d like to discuss any of these funding options for your own growth plans.  I am a registered and approved Growth Coach for the Growth Accelerator scheme and would be delighted to help you achieve your growth ambitions for your business.

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