Looking for finance - what should your business consider?

The UK has a new Government in place who have committed to "putting economic growth at the heart of its legislative agenda".  Their manifesto and the recent Kings Speech have laid out their ambitions for their term in office, but the UK business sector will wait with bated breath to hear how that will translate into action to support their growth ambitions.  No matter your political allegiance, change can provoke a level of momentum and now may be the ideal time to regroup, review existing plans and place a renewed focus on driving plans for the final half of this year.

An essential ingredient in making plans happen is having access to a reliable and flexible funding solution.  When seeking finance for your business, there are several factors to consider to ensure that you make an informed decision when choosing the right finance solution for your business.

Funding Needs

Determine what you need finance for and how much do you require. Are you looking to cover short-term cashflow gaps, invest in equipment or assets, expand your operations, or fund a specific project? Understanding your funding needs will help you identify the most appropriate financing options.

Are you eligible

Understand what the eligibility criteria is for each financing option. Funders may have specific criteria related to your business's size, age, revenue, credit history, or industry. By assessing upfront whether your business meets these requirements can help save time and increase your chances of securing finance.

Speed and Accessibility

How quickly do you need access to funds?  Some financing options, such as traditional bank loans, may have longer approval processes, whilst others, like invoice finance providers, can offer quicker access to funds

Reputation and Reliability

Research the reputation and reliability of potential funders. Choosing the right funder to work with is important.  Look for reviews, testimonials, and ratings from other businesses that have used their services. 

Cost of Finance

Assess the cost of the finance options available to you. Transparency is key here and you should consider factors such as interest rates, fees, and any hidden costs associated with the financing. Compare different funders to ensure that you obtain the most cost-effective solution for your business.

Repayment Terms

Evaluate the repayment terms offered if applicable. If you opt for a loan you may have to repay funds over a set period.  You should consider the duration of any loan or finance facility, the frequency of repayments, and the flexibility of repayment schedules. Ensure that the repayment terms align with your cash flow projections and the purpose of the financing.

Security or Collateral: Understand if the funding solution you are looking at requires collateral or security. Some funders may ask for assets or personal guarantees to secure the funding line against. Evaluate the implications of providing collateral and consider alternative options if you are uncomfortable with pledging assets.

Future Financing Needs

Anticipate what your future financing needs will be. Consider whether you require a one-time injection of capital or an ongoing source of funding. Assess whether the financing option you choose can support your long-term needs and growth plans.

Seek professional advice from financial experts. You could opt to use an advisor who can share their knowledge and experience to help you determine which funding solution and which funder would suit your specific requirements and business.  

Carefully considering the factors above will help you choose the most suitable financing option that meets your business's needs, aligns with your financial goals, and supports your growth and objectives.