Funding for growth is a continuous journey, but one that is particularly onerous for those businesses in the early stages of development.
Many small businesses are started with overdrafts or credit cards or with help from family or friends, or by putting up the family home as security. At some point, the business has to stand on its own two feet if it is to remain viable.
In recent years, over £16 billion of net bank funding has been sucked out of the SME sector, the Federation of Small Business has complained that 60 per cent of its members were finding availability to be very poor with half adding that it was ‘unaffordable’.
So the lending climate is challenging and even well-established, profitable businesses with good credit histories have found it difficult to persuade their bank to support them.
Against such a background you may ask whether it is worth the effort….and of course the answer is yes, but you need access to good advisors who can explain the approach, the questions to ask and how it should be treated as a’ business process’.
It is important to make sure that all forms of lending are considered and the best option for your business is found.
We deal primarily with secured lending but have long-standing partnerships to enable us to assist with asset based finance such as invoice discounting, factoring, leasing or hire purchase, supply chain finance and many of the alternative lenders which are now becoming mainstream.
The two main badges of lending being security and serviceability need always to be borne in mind and, from experience, we know high net worth individuals who will be just as interested in the people running the business, be prepared to meet with them, allow the owners to express face to face, what they do, how they do it and what they are trying to achieve.
These types of lenders often have skills to offer the business as well as financial resource – how many banks can offer that?
As always the key lies in the preparation. At the top of the list is the need to make your business proposition clear and understandable to your target lender with a business plan.
A robust plan should not only help potential lenders understand the business and its objectives but also provide focus to the managements understanding of the business strategy.