The shadow of doubt cast over the UK economy is still looming large and, according to figures from the Federation of Small Businesses’ (FSB) latest Voice of Small Business Index, this post-referendum uncertainty has led to many small businesses putting off expansion plans.
The FSB’s Q2 2016 Index found the number of businesses reporting an intention to increase capital investment over the next 12 months has fallen by more than half over the last 12 months – down from a net balance of 31.9% to 12.2%, the lowest figure since Q3 2012, when it stood at 9.9%.
All of which is bad news for the economy, the growth of which is heavily reliant on smaller businesses having access to the finance necessary to invest, grow, and prosper.
So if your small business is in need of a financial shot-in-the arm, here are five ways you can find that funding…
You might assume your pleas for funding will fall on deaf ears, but a visit to your business bank or building society should always be your first point of call, especially if you both have a good working relationship.
To have any chance of getting funding you’ll need a clean credit record, a robust business plan and sound reasoning as to why you need the extra cash. It’s also worth considering a credit card as a viable option to a loan, just make sure you use it wisely so you don’t come unstuck with any hefty interest payments. It’s also good to check out low interest credit cards.
Instead of approaching just one lender in the case of your bank, you might be better off contacting a broker, or business finance specialist, that can take your case to a number of lenders to find one that fits your needs – CMF Business Finance, for instance, access to a panel of 28 lenders.
A broker can be particularly useful if you’re looking for some sort of specialist finance, such as an operating lease facility or asset finance.
Crowdfunding is a relatively new funding phenomenon that relies on getting smaller amounts of funding from numerous donors, as opposed to leaning on one investor for the majority of the capital – it’s essentially sponsorship for your business.
Donors are offered different levels of investment, often starting from as little as £1, and incentives are offered to encourage people to put in larger amounts.
This type of funding usually takes time and generally has to be for a product or service that really captures the imagination of its intended market, but it can be a great way to both raise cash and create a buzz around your product.
If your business regularly has outstanding invoices from other companies, you can use a financing facility to release the cash from these invoices before they’re paid.
This type of funding is essentially a form of secured borrowing against future income whereby you sell on any unpaid invoices to a business finance specialist, which then releases up to 90% of the money owed to you.
There are fees and conditions involved in this type of borrowing, but cash is usually released within 24 hours and so this can be a great option if you have cash flow problems and need to get your hands on some capital quickly.
It’s always worth checking to see if your business is eligible for any government grants or lending – schemes aren’t always well publicised, so you may have to do a bit of research, but it’s well worth the effort if your business qualifies for funding.
Not all businesses are eligible, and factors such as the size and location of your business are all taken into account when you apply, but there are a wide range of funding options available for all types of business requirements.
As you can see, there are all sorts of ways to fund your business, whether it’s a fledgling start-up or an established operation. Even if you get turned down by the more traditional lenders – a scenario that’s becoming increasingly common with the ongoing economic uncertainty – it’s well worth looking into the other options available to you.