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Financing Business Growth

Is your business getting access to adequate finance in order to stimulate growth? Banks are keep a tight hold on the purse strings when it comes to SME lending, so it can often be difficult to make sure your business’ finance plan is flexible and suitable for producing growth. But if your business can’t get hold of the funds, how can you make sure growth is within reach? According to new research, businesses are looking outside of traditional funding models in order to make sure their business keeps going from strength to strength, as well as getting the funds sorted to get their start up off the ground.

This survey has shown the extent to which businesses rely on sources outside the banks for finance. Friends and family were the most popular way for businesses to get hold of extra cash. Of the 5,000 SMEs interviewed, 20% went to people they knew in order to drum up start-up capital. What’s more, 75% of businesses were able to get started with under £2,000 of working capital.

Many businesses were started up using business owner’s own personal savings. 76% of business owners used their own money stashed away in order to get their new idea off the ground. 13% also used redundancy payments in order to build a new life with a new business.

Only 3% of businesses were able to secure a bank loan to get their business going, showing the state of the funding landscape for small businesses looking to grow. Banks are obviously unwilling to fund business ventures they deem too risky – and start ups most often fall neatly into this category. While limiting the banks’ risk is of course important, this attitude is starting to strangle small business innovation and growth.

If your business of any size, whether it’s a start up or a medium sized enterprise, is in need of extra funding, then it’s worth looking outside the banks. Invoice finance is one particular options that’s growing in popularity. As soon as your business has sales invoices, you can start factoring. 49% of small businesses struggle with cash flow and invoice finance is a great way to solve this, shortening the time between invoice issue and payment by submitting invoices to a factoring lender.

The lending environment is a difficult thing to negotiate for small businesses – getting to grips with your alternative finance options can make it a bit easier to cope.




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