The Different Ways You Can Raise Business Finance

At first glance, the current economic situation does not seem promising for any business looking to raise finance. Whether you are starting a new company or trying to expand an existing venture, money simply isn’t as readily available as it once was. However, there remain many different ways to track down finance for a promising business, and with a little ingenuity your company can still prosper.

The obvious first step for any business seeking finance is to take stock of the personal resources of the owner. This does not simply include one’s own savings and assets, but potentially also those of friends, family and business colleagues. Even a small investment of one’s own money shows a commitment to the business plan which can help leverage significantly more investment from other sources. No external provider of finance will be keen to provide money to the business if it’s owner has no faith in its ability to thrive!

Outside of personal resources, finance provided by banks and building societies remains available to many businesses, and should always at least be investigated. Following the credit crunch, it is true that loans are more difficult to obtain, but they are by no means unrealistic for an existing business with a healthy balance sheet, or even an extremely promising new venture. In the latter case, however, it is likely that some form of security will be required from the bank. This is one case in which personal resources can be leveraged into greater investment in the business, although caution should be used before tying one’s personal finances completely into the company’s success.

If a bank cannot be persuaded to take a risk on your business, there are a number of other types of potential finance. Make sure that you investigate any form of local or central government funding which may be available, particularly if you are attempting to start a social enterprise. As well as grants or low interest loans from governmental agencies, you may also be able to tap into one of the many existing ‘business angel’ networks. These investors, if impressed by your business plan, can often bring expertise as well as cash to your company. However, you must consider the downside of such arrangements carefully, as outside investors of this sort will often want a significant chunk of equity in order to make their involvement worthwhile.

If your business is somewhat established, you may also wish to look into either invoice or asset finance. The former involves an immediate cash injection in return for giving the rights to collect some of your invoice book to an outside agency. The latter can involve either a loan secured on a significant piece of company infrastructure, or a ‘hire-purchase’ arrangement in which you gain immediate use of a necessary asset without having to pay for it upfront. Whichever method you choose, make sure that you are able to meet the repayments. Financing deals should ensure the long-term health of your business, not undermine it.

We can offer you financial solutions to help keep your cashflow healthy. Request a quote now to find out how much invoice finance can save you.

Back to top