There are many sources of finance for small to medium businesses including invoice financing, loans, grants, and crowdfunding.
Research by the BCC (British Chamber of Commerce) discovered that many small businesses only used conventional sources of funding, with many unaware of specialist alternative lenders. Head of economics at BCC, Suren Thiru, said:
“Accessing finance remains crucial to the lifeblood of a business, but more needs to be done to increase competition in banking, including amplifying awareness of alternative finance options.”
Dave Stallon, commercial director of the FSB (Federation of Small Businesses), said that finance sourced via alternative lenders has doubled over the last two years, but is still lower than traditional lenders.
As a business expands, their financial needs change. A business should be aware of many finance sources so they can use the most appropriate one as circumstances change.
As well as loans, grants may be available such as the Government’s Enterprise Allowance, which can top up a business owner’s income when they first start a business.
A good broker can access the best finance deals. They can give advice on short term bridging finance and more longer-term loans such as commercial mortgages. If a business has an existing loan or mortgage, the broker may be able to find a loan at a lower interest rate.
A business needs to have as much information as possible about finance options. Sophie Gibbs founder of gift company The Penguin Patrol, advises businesses to:
“Research your options thoroughly and check what’s out there.”