SMEs
Marketing No Comments

Two fifths of UK SMEs expect financial difficulties in the year ahead

New research reveals that two fifths (41%) of UK SMEs believe their business may be in financial difficulties in a year’s time, while a small minority (3%) expect their business to wind down.

Equally concerning, one in six (16.5%) of SMEs believe they will fail to meet their debt obligations over the next 12 months.

The research was commissioned by the Business Banking Resolution Service (BBRS), an independent and free service established to resolve disputes between SMEs and their banks. It asked 522 senior business decision makers at UK companies with an annual turnover of between £5 million and £15 million, about the challenges they believe their businesses are likely to face in the year ahead.

Rising costs concerns

The research reveals that a significant proportion of SME leaders harbour concerns about the financial pressures posed by the current economic environment.

The BBRS asked SME leaders about the greatest challenges for their business over the next 12 months and identified the main concern as rising wage costs, cited by more than a third (36%). This was closely followed by increases in non-wage business costs (32%), staff retention and recruitment (31%) and rising interest rates and increased borrowing (28%).

Such concerns are likely to be heightened by a more specific pressure, when an individual’s personal finances are linked to their business, with the research finding that 3 in 10 (30%) of SME leaders have acted as a personal guarantor for a loan that the business has taken out.

Contact us today to discuss Business Loans and how we can assist you..

SME banking worries

The BBRS found that SMEs’ concerns extend to a broader range of financial risks and pressures connected to their business banking needs. When asked about their concerns for the year ahead, 60% of SMEs cited the impact of borrowing costs, followed closely by bank transaction fees, which more than half (55%) are concerned about.

Bank fraud and security issues are the other significant concerns raised by SMEs, highlighted by 54%. These fears appear heightened by past experience, with more than a fifth (22%) of SMEs saying they have been a victim of fraud over the past five years. These concerns clearly persist as, looking ahead, a similar proportion (21%) believe bank fraud is the issue their business is most at risk of in the next year.

Banking complaints

Despite the wider financial and economic pressures, SME banking satisfaction rates are high. More than four fifths (86%) of SMEs say they are satisfied by their business banking service, compared to just 10% who are neutral, and only 3% of SMEs say they are dissatisfied. Of the SMEs that have made a banking complaint, a quarter (24%) have not been resolved, but the large majority of those unresolved complaints are about minor issues.

Dirk Paterson, Customer Director at the BBRS, said, “There is a tough year ahead for small businesses and we expect to see a modest rise in complaints, despite high levels of satisfaction with banks. As the research shows, we expect the majority of complaints will be resolved between both parties directly.

“Where SMEs are unable to resolve their complaint with their bank they should get in touch with the BBRS to see if we can help.”

Source: London Loves Business

UK startups
Marketing No Comments

UK startups receive £941 million in government support! Three ways to stretch your business loan

The UK Government has provided startup loans to a total of 100,000 small businesses. This marks a major milestone for the scheme and means that the government has given more than £941 million in support.

Each startup that applies to the scheme is eligible to receive up to £25,000 to help their business grow. Here, we take a look at 3 ways to make the most of your small business loan and stretch £25k to much more!

Use a business credit card

Business credit cards are a godsend to any startup owner. Yet, many budding entrepreneurs fail to use them. Using a business credit card to make purchases will help you to separate your business spending from your personal spending. This is a good way to manage your loan and avoid accidentally covering personal expenses with your startup fund.

Business credit cards also come with a range of budget-stretching benefits such as: lower interest rates, higher credit limits, longer interest-free periods and discounts for early repayments. It is also possible to build company credit by using a business credit card which could help down the line.

Focus on purchases that will make money

At first, it can be tricky to dictate which purchases should be made first with your startup loan. In general, it is best to focus on items that will generate revenue for your business so that you can increase the budget that you have to spend.

It is good practice to think of every item that you buy with your loan as an investment. Will the investment generate good returns for the initial cost? If not, it is probably wise to leave this until you have more money to spend.

For example, it is better to invest the loan on creating new products to sell rather than purchasing a swanky new office. The office can wait until you’ve made some revenue! Learning how to prioritise your spending can massively help towards making your loan go further.

Contact us today to discuss Business Loans and how we can assist you..

Use what you already have

One of the best ways to stretch your startup budget is to make the most of resources and connections that you already have. This means harnessing the skills of friends, relatives, colleagues and business partners to save spending money elsewhere.

If you ask around, you will be surprised at what people around you can bring to the table. You may know people who are great at social media marketing, financial planning or even selling products. At the beginning, it’s good to make the most of anything that you can get for free! Of course, you can’t expect people to provide free service forever. However, there is never any harm in asking when you are starting out.

Conclusion

The UK government-backed startup loan is a great way to get your business off the ground! However, taking out a loan on its own may not provide all of the support that you need. To help stretch your budget try using a business credit card, prioritising your purchases and using free resources where you can.

By Alice Cumming

Source: Business Leader

UK SMEs
Marketing No Comments

UK startups receive £941 million in government support! Three ways to stretch your business loan

The UK Government has provided startup loans to a total of 100,000 small businesses. This marks a major milestone for the scheme and means that the government has given more than £941 million in support.

Each startup that applies to the scheme is eligible to receive up to £25,000 to help their business grow. Here, we take a look at 3 ways to make the most of your small business loan and stretch £25k to much more!

Use a business credit card

Business credit cards are a godsend to any startup owner. Yet, many budding entrepreneurs fail to use them. Using a business credit card to make purchases will help you to separate your business spending from your personal spending. This is a good way to manage your loan and avoid accidentally covering personal expenses with your startup fund.

Business credit cards also come with a range of budget-stretching benefits such as: lower interest rates, higher credit limits, longer interest-free periods and discounts for early repayments. It is also possible to build company credit by using a business credit card which could help down the line.

Focus on purchases that will make money

At first, it can be tricky to dictate which purchases should be made first with your startup loan. In general, it is best to focus on items that will generate revenue for your business so that you can increase the budget that you have to spend.

It is good practice to think of every item that you buy with your loan as an investment. Will the investment generate good returns for the initial cost? If not, it is probably wise to leave this until you have more money to spend.

For example, it is better to invest the loan on creating new products to sell rather than purchasing a swanky new office. The office can wait until you’ve made some revenue! Learning how to prioritise your spending can massively help towards making your loan go further.

Contact us today to discuss Business Loans and how we can assist you..

Use what you already have

One of the best ways to stretch your startup budget is to make the most of resources and connections that you already have. This means harnessing the skills of friends, relatives, colleagues and business partners to save spending money elsewhere.

If you ask around, you will be surprised at what people around you can bring to the table. You may know people who are great at social media marketing, financial planning or even selling products. At the beginning, it’s good to make the most of anything that you can get for free! Of course, you can’t expect people to provide free service forever. However, there is never any harm in asking when you are starting out.

Conclusion

The UK government-backed startup loan is a great way to get your business off the ground! However, taking out a loan on its own may not provide all of the support that you need. To help stretch your budget try using a business credit card, prioritising your purchases and using free resources where you can.

By Alice Cumming

Source: Business Leader

business
Marketing No Comments

How To Get A Business Loan

Whether you’re planning to expand your business with new premises or equipment or to invest in recruitment or marketing, you may be considering taking out a business loan.

To help you decide whether a business loan is the right finance option for you, here we take a look at what they are, what you’ll need to apply for one, and the alternatives, as well as answering some common questions about business loans.

What is a business loan?

A business loan is a form of borrowing for commercial businesses rather than individuals. Some may be more suitable for start-up businesses while others may only be suitable for businesses with a certain number of years of filed accounts.

You’ll usually repay the amount you borrow in monthly instalments over an agreed period of time, with interest on top. Typically, business loans are for amounts from around £1,000 up to potentially millions of pounds.

Are business loans secured?

Business loans can be secured or unsecured. A secured loan is one that is linked to an asset, such as property, vehicles or stock. This means that if you can’t make payments, the lender may take your asset to pay for the loan.

As there is less risk to the lender, secured loans are usually for higher amounts and interest rates are usually lower.

Unsecured loans don’t require an asset as security so tend to be for smaller sums and come with higher interest rates. Unsecured loans may be more suitable for small businesses without large assets.

Some lenders will ask for a personal guarantee from a company director for an unsecured loan.

What types of business loan are there?

Some of the most common types of business loans include:

Bank loan
With a bank business loan, you’ll borrow a set amount of cash from a bank or building society over an agreed period of time, with interest.

Government-backed Start Up Loan
This is an unsecured personal loan backed by the government to start or grow your business. To apply for this type of loan, you must live in the UK, be over the age of 18 and have (or plan to start) a UK-based business that’s been fully trading for less than 24 months.

Start Up Loans have a fixed interest rate of 6%, are for amounts of from £500 to £25,000, and you can repay the loan over a period of one to five years.

Short-term business loan
Short-term business loans are aimed at commercial organisations which want to borrow for a few months, rather than years, and don’t want to be tied into lengthy repayments. They can be over a period of weeks or months. However, they tend to charge higher interest rates than other loans so make sure you know what these are.

Peer-to-peer business loan
With a peer-to-peer loan (or a P2P), you’ll borrow money from private investors rather than a bank. You will usually be matched to these investors through an online platform. You may need to pay a fee to arrange the loan, so pay careful attention to any fees, charges and interest rates before committing.

Cash advance
A cash advance business loan (also known as merchant cash advance) allows you to borrow money against your business’ future credit or debit card sales. The amount you repay monthly will be based on a pre-agreed percentage of your card sales, so you’ll pay more when your business is doing well and less when it’s not.

Invoice finance
This is when a lender uses your unpaid invoices as security to lend to you. There are two main types of invoice financing:

Invoice factoring – you’ll be able to borrow a percentage of the value of your invoices and the lender will collect payment direct from your customers. The lender will then take its costs and you’ll be paid the remaining balance.
Invoice discounting – this allows you to borrow against the value of your invoices, but you’ll collect money from your customers and then pay your agreed fee.

Contact us today to discuss Business Loans and how we can assist you..

How do you decide which type of business loan to apply for?

When considering taking out a business loan and deciding which type to apply for, you’ll need to think about:

  • how much money you want to borrow
  • which loans are suitable for your business type – some loans such as Start Up Loans are only suitable for new businesses, while cash advance business loans are only suitable for businesses that generate a certain amount of revenue via card payments
  • how much you can afford to pay back each month, taking the interest rate into account
  • the length of time you’d like to take the loan out for. While it may be tempting to take a loan out over a longer length of time, you may end up paying more overall in interest
  • comparing the fees and charges with each loan you are considering.

It’s important to compare your options and to shop around before committing to an option or lender, looking at the overall costs of borrowing.

Applying for a business loan

Before you apply for a business loan, you’ll need to be clear about:

  • the amount you’d like to borrow
  • what you are borrowing the money for
  • how much you can afford to repay each month
  • how long you’ll need to repay the loan.

As with other types of loans, your business’ credit rating is likely to be checked, with more competitive loan terms generally being offered for those with a good credit score.

Some ways to improve your business’ credit score include:

  • checking your credit report and disputing any errors
  • paying bills on time
  • if you’re a limited company, filing full, rather than abbreviated, accounts to Companies House
  • making sure you have enough money in your account to cover any planned payments
  • only applying for credit when you need it. Making lots of applications suggests you are struggling financially. You could ask for a quote instead
  • keeping all of your information, such as your business address, up-to-date. Notify suppliers, as well as Companies House, of any changes
  • avoiding county court judgements (CCJ) as these are recorded on your credit report.

You may also be asked for copies of your business accounts, bank statements, details of profits and loss, tax returns, a business plan and proof of address and IDs of company directors.

Once you have gathered your documentation and have decided on the type of business loan most suitable for you, you can shop around then apply.

Comparing business loans

When comparing loans, some important elements to check are:

  • whether you are eligible for the loan you are considering. Always check the lender’s requirements carefully before applying
  • what the interest rates are for the loan and whether they are fixed or variable. It’s worth remembering that Representative APR means that the rate, or lower, is offered to at least 51% of applicants, so 49% of applicants will likely be offered a higher rate
  • whether your loan provider offers a repayment holiday (a few months off paying). However, taking a break from paying will mean that it will take you longer overall to pay off the loan and you’ll pay more in interest in the long run
  • whether there’s an early repayment charge on the loan.

Alternatives to business loans

If you don’t think that a business loan is for you, there are other options including:

  • Business credit cards – if you are looking to borrow smaller sums, a business credit card may be suitable. You may benefit from an interest-free period on your purchases. However, always pay your balance off each month to avoid paying interest charges or fees and check what the card’s annual fee and interest rates are after any 0% period.
  • Crowdfunding – this allows you to raise investment, often by pitching your business idea online, in exchange for rewards for the investors you attract. You could sell a stake of your business through equity crowdfunding or offer a reward such as free products or tickets through reward crowdfunding.
  • Overdrafts – your business account may have an overdraft which is either interest free or a low APR. This is usually only suitable for small amounts, though, and you’ll need to check the terms of your overdraft and stick to them.

By Cathy Toogood, Jo Groves

Source: Forbes

Unsecured Business Loan more lenders finance hurdles businesses small businesses
Marketing No Comments

London start-up founders reap rewards of almost £200m in loans

London has received more start-up loan cash than anywhere else in the country after a decade of a programme supporting entrepreneurs.

Founders in the capital have received £187.1m through the government backed Start Up Loan scheme, with businesses across the country being provided with loans and mentoring.

The scheme has delivered more than 97,000 loans since 2012, worth over £900m to businesses in the UK.

Thanks to such loans thousands of firms were “thriving today” from as far ranging as “from Shetland to Scunthorpe and Carlisle to Cardiff,” business minister Dean Russell said this morning.

Contact us today to discuss Business Loans and how we can assist you..

The programme was launched in 2021 as a £10m pilot scheme, as the brain-child of Lord Young following the 2008 financial crisis.

One business includes Old Street-based start up, Ochushield, which sells screen protectors and has now inked a deal with Peter Jones and Tej Lalvani from Dragon’s Den.

The business first received a £500 loan via Virgin Startup in 2015, with the cash being used to set up the firm website.

“The mentoring programme was really important in the early days of the business, as it helped me take all the right steps,” Ocushield founder Dhruvin Patel said.

Source: CITY A.M.

UK SMEs
Marketing No Comments

Business Loan Requirements: How to Qualify and What is Needed?

No matter what kind of business you run, eventually, you’ll probably need a cash injection to facilitate future operations. To replenish your business capital, you might apply for business loans from a lender. This is a common practice conducted by many enterprise owners every year.

Unfortunately, the loan application procedure can be very frustrating if you don’t know what lenders require. To receive loan approval from some lenders, you must fulfill specific requirements. Understanding these terms as a borrower will help you secure a loan faster and improve cash flow efficiency.

We hope this post will help you understand some basic business loan requirements and conditions. So, let’s start:

The Process Of Qualifying For Business Loans

It may seem intimidating to submit an application for company funding. Understanding the conditions for company loans, which could include excellent personal credit scores, collateral, and a long history of business operations, could speed up the procedure and raise your odds of being qualified for business loans.

Contact us today to discuss Business Loans and how we can assist you..

Factors That Lenders Consider For Your Loan Qualification

Depending on the kind of loan you are looking for, your company, and the lender you are collaborating with, you may need to provide specific documents and information. Usually, you can expect to provide the following information in addition to fundamental business information like your tax ID and business industry:

  • Credit score

Owners of businesses must keep an eye on both their personal and corporate credit scores. Since it takes time to establish a credit history for your company, your personal credit score is often more important. When evaluating your loan application, expect lenders to look at your personal credit history. To increase your chances of approval, you might wish to hold off on applying until your credit is in good standing. Additionally, you can ask one of the commercial credit bureaus, such as Bradstreet, for a report on your company’s credit history.

  • Business operational aging

Most lenders like to engage with companies that have been around for a while. They frequently require operations having been established for at least six months to a year, and banks may require two to three years. Since startups have a poor track record of paying back loans, lending to them is regarded as risky. Check the lender’s minimum time in business standards before submitting your application for financing to be sure you fulfill them.

  • Business strategy

A detailed description of your products and services, your costs, and how you make a profit should all be included in your business strategy. The financial sections of your business plan, including the financial statements and balance sheets, are probably of most interest to lenders. However, your business plan as a whole would show lenders that you have good managerial abilities, an understanding of the industry, and the capacity to repay a loan.

  • Balance sheet

Your balance sheet would show the company’s assets, liabilities, and owner equity. The company’s financial situation at any one time could be displayed by compiling this data into a single document.

To determine the company’s value, you would need to subtract your existing liabilities from your current assets. Lenders would use the balance sheet to assess the business’s financial health.

  • History and cash flow projections

The amount of money left over for a business after paying for routine daily expenses is known as free cash flow. Another instrument that lenders use to assess a company’s capacity to pay back debt is a cash flow analysis.

In addition, lenders would be able to determine how much debt your company could bear and how much money would be available to reinvest in your company by breaking out your cash flow history and estimates.

  • Account receivables and payables report

The amount customers owe you for any completed project is known as accounts receivable. On the other hand, accounts payable refers to the unpaid sums you owe to vendors.

The specifics of how your business handles payments and accounts payable demonstrate to a potential lender whether you are well-organized enough to utilize your resources efficiently or not.

  • Collateral

In order to secure a business loan, borrowers might pledge assets as collateral, giving the lender the right to confiscate those assets in the event that the borrower fails to make payments.

Although not all lenders demand collateral, if they do, the loan amount would be based on the asset’s worth. Among acceptable assets are real estate, machinery, bills, and receivables.

Final Thoughts

Before acquiring a loan for your business, make sure to research and compare lenders. Find a lender whose minimum requirements your company can meet and whose terms and conditions you can survive with.

Source: Financial Investor

UK SMEs
Marketing No Comments

MCA – Case Study

The Client:

The client owns a bar and restaurant and has been trading as a Limited Company for the past 8 months, regularly turning over between £40-50,000 per month.

The Scenario:

The client was keen to expand and improve their premises, especially the outside dining area.  Most lenders require access to the latest filed accounts, which meant a minimum trading history of one year, however this can vary, even with a healthy turnover.

Discover our Business Loan Broker services.

The Solution:

The client understood his options would be limited in consequence from his trading history. Revenue based loans in the form of a Merchant Cash Advance, lend against a company’s debit or credit card revenue (as well as via third parties like Just Eat and Deliveroo).  The client was offered a loan of £39,000 a few days after applying.

Summary:

Instead of monthly, weekly, or daily repayments the lender will take a fixed percentage of the card revenue until the loan is paid back. Since the loan shapes around the business revenue, the repayments will also drop proportionately during slower trading periods.

Merchant cash or business advances are unsecured, incredibly flexible and require very little by way of paperwork in the application process. There are lenders that would consider applications from companies that have only been trading for 6 months.

Funding is quick and a guaranteed top up along with a renewal offer if a company keeps up with the repayments. 

If you have any questions about merchant cash advances &/or want to receive a free quotation, please call 03303 112 646 today. You can also fill in this short online form to get started. Our team of commercial finance experts will get back to you straight away.

Unsecured Business Loan
Marketing No Comments

Six things you must know before applying for a loan

In the old days, family and friends were the primary sources of financial aid, even if approaching them seemed overwhelming. Banks, online lenders, and loan apps have replaced the traditional method.

People apply for loans due to several reasons. It is for emergency cash assistance for car repairs or medical bills, debt consolidation, or educational purposes.

With soaring higher education costs, applying for a loan is a feasible option to cover the expenses. Although a student loan is the way to go, getting a personal loan covers additional costs like rent, textbooks, and training programs.

Sometimes, borrowers land in hot waters by accumulating several loans. A personal loan solves the problem by consolidating every loan into a single debt with a fixed interest rate. Getting a loan starts with banks or online lenders providing every necessary detail.

After the loan is approved, funding is provided on the same day or within a few days. Before applying, you must understand the types of loans to avoid issues.

There are several types, from personal mortgages to small business loans, each with a specific purpose. Apart from choosing a particular loan, you must understand a few things before taking the matter to the bank.

For instance, banks in New Zealand are thorough in identifying scams and uncovering bad credit history. Therefore, an individual must have an excellent credit history to acquire a personal loan.

Some quick personal loans by Nectar offer a reasonable interest rate, especially for those with a strong credit history. With that said, let’s discuss the credit history and other factors you must be aware of when applying for a loan.

Credit Score
Getting a loan starts with going through the credit history. A solid credit history saves money, helping you eliminate financial woes. Borrowing money has perks like interest rates directly related to the credit score.

A good credit score makes you eligible to receive the best interest rates. A low-interest rate helps get rid of the debt in a short period.

Compared to the poor credit history that only gets you rejections from banks, a good credit score offers a higher chance of getting loan approval. Apart from that, you also have the leverage to negotiate for lower interest rates.

Banks lend money to trustworthy people who value timelines. Depending on your income and credit score, there is a specific limit to how much you can borrow. Although some with bad credit history might get loan approval, there are a few system-imposed restrictions.

Besides loan approvals, having a good credit history allows access to various rewards. One of those rewards includes getting the best introductory offers. On average, applicants must have a score somewhere between 500 and 700.

Debt-to-Income Ratio
Before issuing a loan, financial organizations evaluate your budget and creditworthiness by using the debt-to-income ratio. The process ensures these organizations that you will pay off your debts on time.

The ratio expresses the borrower’s portion of income that goes into monthly debt service and is calculated in percentage. Debt-to-income ratios are of two types front and back end. The front end measures the cost regarding income.

The front-end ratio is calculated by dividing the monthly mortgage payment, private mortgage insurance, and home loans by gross monthly income.

Compared to the front, the back-end ratio is a comprehensive calculation that includes debt obligations like a credit card. What makes a good debt-to-income ratio is the type of loan you are looking for. Depending on the lender, a higher or lower cut-off is offered.

Application Process
The primary step of borrowing money from lenders starts with filling out the application form. You are requested to provide all the necessary documents depending on your loan type. Documents include financial statements for the recent and the previous years.

Some lenders initially start the process with a credit check. After providing the documents, the next step is loan underwriting. You work directly with an underwriter who verifies the credibility of the submitted documents. These professionals thoroughly analyze the cash flow and other pertinent financial information.

An underwriter guides you throughout the process by understanding the current circumstances and future goals. Once the loan is approved, the final phase of the application process is the loan closing.

A loan closing specialist signs the required documents, including the Note, Deeds of Trust, and security agreement. After doing so, the funds are distributed, and signed copies of the documents are given to the lender and applicant.

Contact us today to discuss Business Loans and how we can assist you..

Down Payment
While purchasing a loan, you pay a portion of the price, known as the down payment. The amount depends on the amount you are willing to pay. Some believe the more extensive the down payment, the better, while others prefer making a small payment.

The benefit of the bigger down payment is that it minimizes the loan amount with low-interest rates. With large down payments, you are less likely to suffer financially during tough times. You are more likely to establish a significant amount of equity with large down payments.

One of the primary reasons people prefer a small down payment is that there is no limitation on the amount needed. Small down payments are beneficial for saving money for emergency reserves or fulfilling other financial priorities.

When buying a home, the deposit fee must be 20% of the home’s value. Those interested in investing in residential properties must pay the deposit fee of 40% unless the particular property of interest meets the exemption criteria. Your application is reviewed before approval if the fee is less than 20%.

Interest Rates
Before applying for a loan, understand the interest rate and why it matters. In layman’s terms, the interest rate is the price you pay for borrowing money. The general rule of thumb is when paying back the original borrowed amount, you back a specific loan amount in percentage as interest.

A few exceptions, like monthly full credit card balance payments, exempt borrowers from paying interest rates. People with a solid credit history are at an advantage of receiving favorable interest rates.

The interest rate borrowers pay depends on the duration of the loan and whether the rate is fixed or subjected to change. Several factors are crucial to determining interest rates. These include credit history, income, credit reports, and the loan timeline.

Loan Tenure
The time given to repay the loan depends on a few things. The first step is to analyze your finances and your monthly income. Subtract the monthly financial commitment from your income to determine the amount you can pay for the loan EMI.

The amount calculated is directly related to the loan tenure. With larger amounts, you need more time to pay interest. Along with the loan, also calculate the interest rate the lender charges.

You can also pay off your loan even before the tenure is complete. However, keep in mind the pre-payment penalty you pay to the lender. It would be best to weigh your options and only consider the pre-payment option when you have sufficient funds.

Conclusion
Financial crises can descend upon you at any time. While many set-aside funds for challenging times, some need financial help. In such circumstances, applying for a loan is the most feasible option.

Several reasons contribute to loan consideration, from medical expenses to home renovation and relocation. Those who want to seek a loan must understand the nitty gritty. First and foremost, decide the type of loan you wish to apply for because each type is specific to your financial needs.

After doing so, understand the debt-to-income ratio, down payments, and the documents required to fill out the application form.

Source: Financial Investor

funding small business loan
Marketing No Comments

Starting A New Business: Best Ways To Raise Finance

Raising finance is one of the biggest challenges that many new businesses face. Moreover, if you have big plans for the future, you may even require additional funding. For example, this may be as simple as boosting production or an ambitious step, such as buying another company. Regardless of your goals, there are many different ways to seek funding, which don’t always mean you need to rely on traditional avenues, such as banks. The most appropriate funding option for you will be determined by your circumstances, including the size of your company and the nature of your growth plans. This article will find some of the best ways to secure financing for your new business.

Bootstrapping Your Business

Self-funding, also known as bootstrapping your business, is an effective way of financing, especially when you’re just starting out. It is common for first-time business owners to have difficulties securing funding without showing some traction or a plan for growth. As a result, many entrepreneurs invest from their own savings and ask their family and friends to contribute. This is normally easier to raise, as there will be fewer formalities and compliances to consider. Bootstrapping your business may be a good funding option if the initial requirement is small. However, if you need money from day one, you may want to consider other solutions.

Bridging Loans

Bridging loans can be used by businesses to cover their funding requirements in a variety of situations. They’re designed to be used in limited circumstances and typically in anticipation of a business receiving long-term funding. Advias is an experienced and reputable financial advisor who specialises in bridging finance, development finance, and premium mortgages. Thanks to their in-house analysis tools and extensive database of lender contacts, they can deliver accurate solutions in a timely manner. When it comes to starting a new business, bridging finance can help fill in the gaps and ensure that all necessary purchases can be made to kick-start the process.

Crowdfunding

Crowdfunding is a way of raising finance, which involves asking a large number of people to each invest a small amount of money. There are several different types of crowdfunding, including donation, equity, and debt. Donation crowdfunding means that people are willing to donate money to your enterprise simply because they believe in your vision and goals and will want nothing in return. Equity crowdfunding refers to people who invest in your business in exchange for shares and a stake. Finally, debt crowdfunding means that people lend you money, which they expect to receive back with interest.

Contact us today to discuss Business Loans and how we can assist you..

Credit Cards

Business credit cards are some of the most readily available ways to fund a new business, as they offer a quick way to get instant money. This may be a good funding option for you if you have just opened your business and don’t have many expenses. You can use a credit card and continue to pay the minimum payment. Nevertheless, remember that interest rates and costs associated with credit cards can build up very quickly. As a result, if you don’t use your credit card responsibly, you may accumulate debt, which can damage your business owner’s credit.

Business Grants

Your business may be eligible for a small business grant, which can help you cover certain types of expenditure. Take a look at the business finance support, that is available for start-ups and other small businesses. It can cover things such as the cost of premises, IT equipment, and machinery. Each grant will require a different application process, including strict qualification criteria. While there is no guarantee that you’ll be eligible, it’s still worth exploring your options, especially if you have just started a new business.

Angel Investors

Angel investors are typically high-net-worth individuals who invest in businesses during the early stages of their development. Usually, investors use their disposable finance to provide equity finance to a company. In exchange, they will normally take shares in the business and express an active interest in the company’s growth. Therefore, they must believe in the business and in you. In addition, angel investors will support you with their knowledge and expertise so that they can see a strong return on their investment within three to eight years.

Venture Capital

You may consider a venture capital firm if you need a serious amount of money in exchange for a big percentage of your company. However, this is a competitive area, so you will need an outstanding strategy, as well as a great business plan and an impressive pitch. In general, a venture capital investment may be suitable for small businesses that have moved past the start-up phase and are already generating revenue. Keep in mind that this may not be the best option for you if you’re not interested in mentorship and compromise.

By Sam Allcock

Source: Business Mole

UK SMEs
Marketing No Comments

UK ranks second for business startup financing

UK startups raised more cash in early 2022 than counterparts in China, France or India, and were surpassed only by the US, data showed.

The figures from data provider Dealroom were published alongside the UK government’s new digital strategy on the first day of London Tech Week.

UK startups raised a record $11.3 billion in venture capital in the first three months of the year, according to Dealroom.

And they raised $15.6bn in the five months to the end of May, half of which was from the technology sector.

This performance was dwarfed by $123.4bn in the US, but beat $11.8bn in China and $14.8bn in India.

“So far this year, the UK has raised more venture capital than any other country in the world apart from the United States, overtaking both India and China compared to full year 2021 rankings,” Dealroom said in a statement.

The performance marked a “record quarter” for the industry, despite a “turbulent start to the year for global markets” following Russia’s invasion of Ukraine, according to Dealroom.

The data provider added that Britain currently has 122 “unicorn” businesses — technology firms that are worth more than $1bn.

Contact us today to discuss Business Loans and how we can assist you..

Technology minister Chris Philp, unveiling the government’s new digital strategy at London Tech Week, said its goal was cement Britain’s place as a “global tech superpower”.

“In the last five years the UK has raced ahead of Europe to become a global tech leader and now we’re setting the course for the future,” Philp said in a speech at the industry event.

“The digital strategy is the roadmap we will follow to strengthen our global position as a science and technology superpower.”

(AFP)

Source: gg2