Finding the appropriate funding for your business may prove critical to its immediate and longer-term success. In this day and age, however, your funding options are wide and varied.
If you are looking for business finance, therefore, here are a few tips and suggestions to help you choose a suitable course for you and your business:
Look further than your high street bank
- traditionally, anyone in search of business finance paid a visit to their local bank manager to request a loan as a matter of course – and the majority of small businesses are likely to have secured at least some funding from this source;
- since the financial crisis of 2008, however, the tables have turned, and high street banks appear more and more wary of lending to local businesses;
- lending to small businesses was £5.6 billion in 2017, but that sum was down 11% compared to the previous year, according to a report in the Financial Times on the 30th of March 2018;
- unsurprisingly, perhaps, the SME Alliance of small and medium sized enterprises complain that banks are “reluctant to lend”;
Understanding your options
- the vacuum left by the banks has been filled to some extent by a welter of alternative sources of funding – commonly in the shape of so-called crowdfunding initiatives and peer to peer lending;
- these online platforms strive to match individual savers and investors with enterprises looking for business finance;
- whilst these have undoubtedly widened the funding options for small businesses, they have also attracted the concern of the Financial Conduct Authority (FCA), which has expressed its worries about the clarity and transparency of some of the crowdfunding and peer to peer lending platforms;
- according to its press release of the 27th of July 2018, therefore, the FCA is considering the introduction of new rules restricting their operations;
Don’t be misled
- the investigations by the FCA highlight the extent to which some investors and borrowers using certain peer to peer lending solutions may have been misled by the headline figures advertised – hence, the proposals to introduce new rules on the transparency of operations by such platforms;
Balance sheet lenders
- but there are other alternative sources of business finance which rely on funds already owned and managed by the lender;
- so-called balance sheet lenders share similar entrepreneurial backgrounds, motives and objectives to the very businesses seeking additional funding;
- these are the specialists in the provision of short-term, unsecured fixed rate loans of anything from a few thousand pounds right up to £100,000 – where the majority of borrowers are likely to be in search of business finance of around £50,000 or less;
- lenders in this market recognise that, in this constantly and rapidly changing business environment, short-term business finance is commonly required at very short notice;
- thanks to the sophistication of their online services, therefore, they have developed systems allowing a decision in principle to be taken practically immediately on any application for a loan;
- if that decision in principle is favourable, the potential borrower makes a formal application for the requested funds; and
- if that formal application is also approved, the funds may be transferred electronically directly to the borrower’s business bank account within 48 hours or so.
If you are looking for a rapid decision on your request for unsecured business finance, therefore, your options are wider than they have probably ever been – provided, of course, you consult the experts with experience in the provision of short-term, unsecured fixed rate business loans.