‘I am busier than ever but my cash flow is worse then ever’
‘I know I need to borrow to fund the growth of my business but where do I start?’
‘I am not sure what type of borrowing would best suit the funding I am looking for?’
Just some of the comments that we hear from business owners on a regular basis
So why would a business consider borrowing money? The answer is there are a number of reasons and these can vary from winning a new contract but needing to fund the raw materials and wages before the job is done, to having an opportunity to buy another business or outlet.
An important issue to always consider in borrowing money is ‘can I afford the repayments’ and ‘what will this extra money allow me to do, what additional level of profit can I turn this into?’
Sometimes a business may need to borrow for other reasons which are less positive. They may have lost a contract and need to fill the cash flow gap left for a period of time, they may have to replace a vehicle because it has had an accident or a customer may have gone out of business owing them money.
This does not have to mean that borrowing is wrong it can be used to give breathing space whilst more business is won to replace what has been lost or while an insurance claim is being resolved.
Bad borrowing is where it does not make sense.
So if a business is looking for borrowing where can they go?
In the current market place the good news is that there is more choice than ever before, the rise of ‘alternative’ funding which covers a wide range of non bank options continues to be seen.
Often the option that is best for any business will depend not just on price but a number of other factors such as the length of any loan, the level of security a lender may need, the flexibility of the facility and many others.
With so much choice how do I know where to get it from?
This is where your accountants or a good finance broker can really help. They may have access to a much wider variety of choice than a business could themselves. They can help to identify the pros and cons of all options making sure that the type of funding sourced is not only at the right price but also the most suitable solution for that particular business need.