A lot of finance brokers will only deal with medium to large businesses. We have a wealth of experience in helping small and startup businesses find the appropriate commercial funding solution to grow and succeed.
Through our many and varied channels, we can source the most appropriate finance for start-ups. Many people, when starting to trade, commit to inappropriate forms of new business finance, that they later regret. They can be tied into start-up finance that can inhibit future expansion or development and can stifle their business, just as they are looking to move forward.
By selecting the most appropriate form of start-up finance at the outset, future potential problems can be avoided and a smooth transition to the next stage of a business’s development can be negotiated smoothly. It may not be the best option to take a new business loan initially, depending on the business’s circumstances but we can advise on the best new business finance at every stage of evolution.
There are so many options for start-up businesses seeking finance, that you need help in seeking the most appropriate form of new business financing and we have access to over 100 years’ experience of small business banking to assist you to make the correct choice.
Although more difficult there are still a number of financing options for start-up businesses. We, as finance brokers, are able to help you get access to these services and suggest the best options available to you.
This form of finance is the most difficult for a High Street Bank to provide. They have no track record of the business to evaluate and may not know your capabilities of running a business. Depending on your industry, there are other ways of raising finance but they are likely to be more expensive.
The main issues with finance for buying premises for new businesses are providing the deposit and proving the ability to service the proposed borrowing. If you don’t have the deposit you will not obtain the mortgage and even if you do, the ability to service the debt is then carefully assessed, normally with a margin of safety required.
Again, High Street banks are more reluctant to provide, what they would regard as unstructured facilities, at an early stage of a business’s evolution. If you are able to obtain an overdraft, make sure to use it sparingly to cover timing differences, banks do not like solid overdrafts, which they call “hardcore”.
Many fledgeling businesses suffer growing pains, once they have cleared the initial hurdles of establishing the business and obtaining orders and sales. By using their debtor book to help to finance their ongoing working capital requirement, they can obtain a facility that can grow in line with their business.
Retail businesses can look to their credit card sales, where some providers may insist on a deferred settlement period, to provide cash flow for their business.
A business loan could be used to buy capital items, such as plant and machinery or fixtures and fittings; to fund stock purchases or pay wages. While useful to get the enterprise off the ground, it does have the disadvantage of then just being a burden, as repayments will need to be made. Remember that profits do not necessarily equate to immediate cash.
It will be easier to obtain finance if you have assets, such as property, to secure any borrowing. It will make the interest rate lower and lenders will be more amenable to providing, what they almost regard then as “pawnbroking”. You need to bear in mind that any security offered may well be sold if the business fails, sometimes at below market value, if a speedy resolution is required by the lender.
It might seem strange to give up some of your business to an outside investor but that is what “Dragon’s Den” or “The Apprentice” is all about. In addition to obtaining finance, you may also obtain expertise and a mentor, who can help to guide you through the difficult times. The equity investor then also has a vested interest in helping you to make your business successful.
This is a relatively recent and expanding form of finance. Basically, investors, who are obtaining a low rate of interest from traditional sources such as banks and building societies, place money with peer to peer lenders, who then provide finance to businesses. The interest rate will be more expensive but the vetting procedures are, currently, less invasive than the traditional funders. Loans can be short-term, however, which can lead to problems for businesses, just as they are looking to expand.