Does your business have the cash that it needs?

Does your business have the cash that it needs?

 

For any business, whether start-up, established or expanding, cash flow is the key. It needs to be managed and not enough cash can be a disaster. Finding money via Business loans from Banks or attracting that injection of equity to grow your business is not easy. Each type of lender has their own specific requirements and […]

For any business, whether start-up, established or expanding, cash flow is the key. It needs to be managed and not enough cash can be a disaster.

Finding money via Business loans from Banks or attracting that injection of equity to grow your business is not easy. Each type of lender has their own specific requirements and it is important to understand the funding market, the part that Banks and other lenders play, approach the right source of funds and offer the right information to boost your chances of success.

As a startup it is worth checking out what the banks offer – look at their web sites Natwest has information about what they need when considering lending as does Lloyds.

It is important for any business to make sure that their borrowing is structured correctly – longer term plans need longer term finance – Loans, an injection of long term Equity which can come from Business Angels – check out UK Business Angels Association or via the newer crowd funding offerings.

Shorter term borrowing to plug cash flow gaps can be taken on overdraft or via factoring or invoice discounting. You need to understand the options and our Access to Finance support can help you through the maze and provide a specialised coach to work with you.

 

For Startups

Most startups are funded from founders’ savings and/or with cash raised from amongst the founders’ family and friends. Banks are generally slow to lend money to startups, although they may consider personal or property-backed loans to the founders.

Startups with the potential to grow quite rapidly and to scale to significant size can be of interest to Angel investors, who are usually successful business people who wish to invest in strong growth prospects.

The ‘new’ kids on the block – Crowd funding, syndicate room and the like may be a route for start-ups, but remember some of them are not regulated by the FSA and you need something that will appeal to the public to be successful. Crowd funding raises money from a large number of people for a project – typically over the internet.

 

Growth Capital

Many businesses reach a stage where they feel they could grow significantly if they had some extra cash or investment.

Banks tend to fund growth potential less than they did prior to the financial crisis which began in 2008. They often prefer where they can to fund assets (e.g. property and plant) and the trade cycle (e.g. invoice discounting) so it is important to get your figures right to appeal to them. Banks will back strong projects, particularly those which have a promising track record, and it is very important that a realistic and well-reasoned proposition is assembled.

Angel investors / Venture capitalists will be attracted to businesses which can continue to scale rapidly on the back of strong intellectual property (e.g. patents, brands, knowledge) and strong marketplace differentiation. Again the Crowd Funding markets can be used, but they work well with something that appeals to a broad range of people.

We have strong links with the funding market and can support you in your search for business loans and alternative business finance. We are happy to talk to you – give us a call on 01223 4221325