Business Funding

3 ways to fund your business

There have never been more ways to fund your business than today. The financial crisis has made the funding landscape more flexible than ever! Here we will talk about different ways you can fund your business.

1. Bank lending is not dead

In fact, banks are lending, according to SME Finance Monitor, the usage of external finance (loans, overdrafts and credit cards) increased the most towards the end of last year since mid 2012. Banks can provide business loans if you have sufficient personal or business security such as a house or a car. Our partners can assist you with getting competitive rates with the banks whether it be against a commercial property or a personal asset. Even if you’ve been rejected by the bank, our expert advisers will look at your business accounts and assets, and may even be able to secure you a better lending rate than the bank!

2. Financing assets for your business is easier than getting a bank loan

What if purchasing a machine or technical equipment sped up the way you do business and make you more profits – but you don’t have the cash to buy these upfront? Asset based lending is a popular increasing trend, but sadly, not many business owners are aware of this. The concept is simple, a company or investor will buy the equipment up front, and own the asset. You then lease the equipment off that company and can use it as necessary. Depending on the type of agreement, you may even be able to own that equipment after a certain length of time, and if you can’t keep up with payments, the asset finance lender would retain ownership of that asset. There are many different types of asset finance, and we’ve summarised them here.

3. I have an outstanding invoice, it won’t be paid for a month, but I need that cash sooner!

Over £200bn a year are provided to businesses through factoring or invoice discounting. Factoring is a method which allows you to sell your invoices to a company, less a fee. Typically 75-90% of the invoice is released within 24 hours, with the remainder (less fees) released once the invoice is paid. There are two options for invoice finance: invoice factoring settles outstanding invoices directly with the customer, and invoice discounting is the process of taking out a business loan that’s secured against your business’ outstanding invoices. Our partners work around the clock to get your business competitive rates for invoice finance – find out more and get in touch with us here.

Getting funding from the banks

Getting funding from the banks is one way of funding and growing your business. Banks, like all other for-profit companies, are in the business of making money. So the main thing they look for in any company that approaches them for funding, be it a craft shop or a jet engine manufacturer, is whether that company would be able to repay its loans in full. How can you prove to a bank that you’re not going to just run away with the money or default the day after you’ve received the loan? To start with, you need to prove to the bank that your business acumen isn’t circumscribed to choosing which craft items to buy or produce; you need to have a clear idea of where the business is going, including how much money you need and precisely what you need it for. This will usually involve producing a business plan. At their best, business plans tell an engaging story about your business – whether you just have a lifestyle or you want to take over the world. Most funders will also credit score you, so make sure you have an up to date set of accounts and a trading history.

Another often ignored way of getting a bank loan… is not going to a bank. Think of it this way – banks are constantly inundated with business applications. Naturally it is very time-consuming to sift through all of them in order to find the reliable, credit-worthy companies. What’s more, they’re less willing to take the risk. So what many banks do is, instead, rely upon brokers and corporate financiers to contact the relevant bank managers on your behalf. A bank loan application that comes via a broker is far likelier to success purely because brokers only progress the applications that they are confident about, which means banks are far likelier to engage with the company and, eventually, lend money to them.

But bank debt isn’t the only option open to craft store owners looking for finance to re-kit their stores. I’ll mention three more: asset-finance, stock-finance and shopfront renewal grants. Asset finance is a form of debt that sees the lender effectively buy the asset (e.g. machinery, cars) and then lease it back to the user. So if a craft shop possessed any machinery or electronical equipment (e.g. a diamond cutter, pottery machines, or even something like a printer or a point-of-sales system) it would be possible for a lender to buy that piece of equipment but for the shop owner to use it as if it were theirs. If your business requires the purchase of stock (usually from abroad), a stock finance facility is another interesting form of finance. It’s usually quicker to access stock or asset finance, usually requiring less risk that getting a bank loan.

Finally, even if you have decided you wish to pursue the bank route to the detriment of all other routes, don’t forget about grants. Nothing tastes sweeter than a bit of free cash with hardly any strings attached! You may be surprised to hear that many local authorities offer small business grants to help shops renew their shop fronts. It’s win-win – local authorities get a nicer-looking high-street, and businesses get to make their shopfront, which is effectively their way of enticing in any casual passers-by, that bit snazzier and more appealing.

At we have a network of experienced fund raisers and advisers that can help your business seek funding, whether that be through a bank loan, stock finance, or asset finance.

Lending to SME's fall in Q1 2014

A recent study from the Bank of England showed that the government’s flagship Funding for Lending Scheme (FLS) declined in the first quarter of 2014. Net lending from the 36 banks and building society participants was down by £0.7bn for SME’s, compared to the previous quarter.

One of the biggest plans for legislation is to force banks that reject mortgage and business loan applications to pass on details to alternative lenders.

John Longworth, director general of the British Chambers of Commerce, said: “It is concerning that lending to firms across the country has continued to contract even though the Funding for Lending scheme has been refocused towards business lending. This provides further evidence that Britain’s business finance system remains broken.”

Despite lending from banks falling for SME’s, alternative lenders have stepped up to fill the gap. Riskier lenders with an appetite for funding small businesses are appearing almost every week. Here at business funding we connect business owners with the appropriate advisers, depending on the needs of the business and the financial situation.

So… you want to buy a commercial property?

Despite the rapid increase in property prices in the UK during the last quarter, banks have tended to shy away from property lending as a result of increasing regulation. This funding gap has been filled by pension funds, hedge funds and alternative lenders betting on the housing market to provide capital to those wanting to get property.

London’s commercial property market has also seen huge amounts of investment, according to recent reports in the construction and supply chain finance industry. In Q1 2014, £4.3bn was invested into commercial property in London.

Our tips for securing a new commercial mortgage/ re-mortgaging

  • See how much cash you can put in to the deposit.
  • Assess your assets – do you or your business partners have other property they can refinance to contribute towards the deposit or back as a security?
  • Loan to value – these are 60% for investments, 80% for owner-occupied properties, 90% for dentists, and 100% for GP surgeries and veterinary practices.
  • Make sure the finances of your company are up to date – accounts, VAT returns, etc.

Here at Business Funding, our advisors work round the clock to help SMEs secure commercial mortgages, develop commercial property and even save current commercial property owners by transferring them to lower rate mortgages with other banks. So even if your bank has said no, get in touch with us to find out how we can help you.

Update: Budget 2014

BUDGET 2014: Social investors, Enterprise Zones and exporters win; and Annual Investment Allowance raised

Some other significant changes to the growing company market brought about by the 2014 Budget are outlined below:

  • The Annual Investment Allowance against corporation tax has been doubled to £500k, giving businesses the chance to claim against a large amount of inward investment. The relief will also now run to the end of 2015. If your business needs help with tax related funding, get in touch with us here
  • The Direct Lending Scheme for export finance, initially introduced as a temporary measure, is to be made permanent and the budget for it doubled to £3bn. Businesses that require cash to process export orders can access loans from the Government. You can talk to us about business loans for your company, enquire here.
  • The benefits available businesses relocating to Enterprise Zones (including business rates discounts and greater capital allowances) will be available for a further 3 years.
  • Social investments will now be eligible for the same 30% tax relief as that available under the EIS scheme, and will cover both loans and equity investments. Relief will also be available for social impact bonds. If you want to find out more about equity investment, click here.

Challenging the banks

Alternative lending is on the rise yet again, as seen by the bold move of the insurance giant L&G to challenge bank lending by providing loans to medium-sized UK companies.

As interest rates are at a historical low, returns from bonds issued by institutions and governments haven’t been terribly attractive. The life insurance and investment group has unveiled plans to launch a lending operation which will allow medium sized companies to borrow sums as low as £20m, for up to 10 years.

This market niche has also been seen by Prudential’s fund management business M&G who provided a loan to coffee chain Caffe Nero recently.

As returns from fixed-income products remain low, we have seen alternative finance on the rise lending to companies as the banks fail to provide SMEs with cash to grow their businesses.

Here at our team are working to bring you even more products to help finance your business. Whether it be unsecured loans or cash to buy goods for your business, or even if your business is thinking of buying a commercial property, we can help point you in the right direction. See what types of finance you can apply for using our fund finder.

Boosting investment in trade and stock

The UK trade industry has seen a steady growth from the start of the year, indicating growth in the construction and manufacturing economy. The Office for National Statistics recently reported a rise in exports and fall in imports which subsequently helped the UK’s trade deficit by £2.6bn.

As a result of expanding domestic trade, UK companies needing cash boosts to buy stock and goods are struggling to get short-term finance. Only today, John Cridland, director-general of the CBI called on the Chancellor George Osbourne to boost investment and export trade in order to rebalance the UK’s economy.

Other initiatives include communities such as ‘Trade Finance Global’ which is an online community where users can gain practical insights on key international trade topics from articles, videos, webinars and special features.

Here at Business Funding, we have advisers who are experts at lending short-term cash specifically for UK companies seeking to buy stock or finance trade. Click here to find out more or get in touch with us now.

UK small companies are hotting up, according to leading market information service Beauhurst.

Beauhurst, the leading source of deep data on growing companies, released its 2013 Annual Equity Investment Review at an event on 26 February 2014 held at the National Gallery in association with the Business Growth Fund.

Stephen Bence, Chairman and Co-founder of Beauhurst, shared his findings on UK equity investment to the hundreds of finance professionals in attendance. He said:

Beauhurst research shows that 2013 was a boom year for investment with over £1.5bn invested into 650 of our fastest growing companies. That’s 35% up from 2012. And our very early data from 2014 suggests that investment in the first 8 weeks of the year is up 65% from the same period in 2013.

The angel flies

Much of the growth in equity investment is down to seed-stage investing, which has risen hugely in recent times with the 2013 total exceeding the combined total from 2011 and 2012. This is the typical preserve of the “angel” investor whose interest has been kindled by generous tax breaks and a rise in crowd funding platforms such as CrowdCube that make it easier to access the seed-stage market. Investments concluded via these platforms have increased 8-fold over the past 12 months.

Low aspirations

It is oft said that there’s no “venture” in “venture capital” and there is certainly a mismatch between the disruptive technologies that have dominated the media (bitcoins and 3D printing particularly come to mind) and the activities of the venture capital community (just a single bitcoin investment and nothing for 3D printing during 2013). This isn’t because these areas are pure media hype because there have been plenty of US investments in these areas.

The new equity gap

While early-stage (seed) investing and later-stage (growth) investing are booming, the middle- stage (venture) is losing market share. There is a real risk that this stifles the growth of the promising batch of seed stage companies that will need investment over the coming years. There is a clear need for Government to look at what it can do to stimulate this part of the market.

Business Funding Report: Banks are lending again, globally

Here at business funding, we make finance easier to understand, and easier for your business, to help your businesses grow.

In the last 6 months, we’ve seen a turnaround in bank lending. Banks are lending, but small businesses generally have little confidence of this. America has seen a huge rise in both community banks and main stream banks become players in big lending – both private equity and loans.

Arthur Weiss, a partner at the American based law firm Jaffe Raitt Heuer & Weiss PC, said that there has been a huge shift towards banks now competing and bidding to help provide credit for businesses.

He said: “Banks are lending to customers again instead of litigating against them”.

Last summer, Southfield-based Sun Communities Inc., a provider of manufactured- home communities, wanted to replace a $350 million line of credit. “A lot of banks wanted to participate,” Weiss said. The company in fact managed to raise $600 million.

Closer to home, Spanish banks are now starting to provide more commercial and residential mortgages to investors at competitive rates.

Meanwhile a recent survey on Indian businesses by the Credit Information Bureau have shown that banks are once again actively lending to consumers and businesses, although are being tougher on lending to those with a poor credit history.

Back in the UK, the five biggest lenders, RBS, HSBC, Santander, Lloyd’s Banking Group and Barclays have joined forces to launch a huge campaign which will encourage SMEs to apply for loans.

But however big or small your business is, whether it has a turnover of £1 million or £100 million, cash flow problems are working capital are continuous problems. The bank may have already said no to you, and that’s where we come in. Our expert business loan advisers have helped hundreds of business owners get loans from the bank, even if they’ve been rejected previously. They work hard and study your business before placing you with the right bank manager or even look for other alternative ways of financing your business.

Talk to us now for a free, friendly chat, we want to help you out with your business as much as you do!

Peak in the construction industry strengthens the pound

The pound strengthened today following positive news on the UK construction industry hitting the sharpest rise since August 2007, according to Markits latest figures . As housing activity peaks in the UK, more jobs have been created in the construction sector, and confidence is high for a promising 2014.

The construction economy has also seen a recent rise in domestic and export orders from overseas, which shifts the reliance on UK household spending to drive growth.

At business funding, our expert advisers also provide and assist businesses seeking short term import and export finance. So if you’re a manufacturing or construction company struggling with cash flow and have an ever increasing order demand, talk to us now for more information about short term (90 day) finance options to purchase stock and materials.