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Business financing and funding options have expanded greatly in recent years and you’re no longer restricted to loans from the major banks. The alternative finance market offers funding solutions that you may not have considered before, and that are typically quick to obtain.
Initially, you’ll need to consider your specific business’s needs in terms of funding – why you need the finance, roughly how much is required, and how you’ll repay it. You may need regular support for your cash flow each month, for example, or a cash lump for investment purposes.
A secured loan may be appropriate if your business owns one or more assets of value. By using an asset as collateral, the lender can repossess it if you don’t keep up with the repayments, which makes it a low risk option for them.
Benefits of secured business loans
Unsecured business loans don’t require you to put forward any assets as collateral and can be fast to access, although you may be asked to sign a personal guarantee. Unsecured loans of up to £200,000 are typically available, and these can be used for any business purpose.
Benefits of an unsecured business loan
Invoice finance is a type of alternative funding that might be suitable for your business if it has a strong sales ledger. Factoring is one form of invoice finance that releases around 90% of the value of your unpaid invoices, usually within 48 hours.
Benefits of invoice finance
Hire purchase offers you a way to purchase expensive assets without using up your business capital. A hire purchase agreement involves making fixed monthly repayments over a specified period. It also incorporates a ‘completion payment’ that transfers ownership of the asset to your business at the end of the agreement.
Benefits of hire purchase
Equipment or asset-based refinancing allows you to sell a high-value asset to a lender, and then rent it back from them. You make fixed monthly repayments and take back ownership when the contract is completed.
Benefits of asset-based refinancing
UK Business Finance can help you to find the most appropriate form of funding for your needs. Our services are free-of-charge and we can make the funding application on your behalf. Please get in touch to find out more – we operate a nationwide network of offices.
We work across a wide range of sectors throughout the UK, providing specialist advice to each sector.
Why use a commercial finance broker?
A commercial finance broker plays an important role for businesses looking for funding. They can source the most suitable types of finance using a whole-of-market search strategy whilst also accessing the best deals and lenders.
What are cash flow forecasts and why are these important when obtaining business funding?
Operating with positive cash flow helps your business to pay its bills, conduct day-to-day trade with minimal issues, and plan confidently for the months and years ahead. But how do you know that there will be sufficient cash available when it’s needed?
Good debt vs Bad debt
Managed well, debt can improve your credit rating, enable expansion, and stabilise cash flow. It’s the backbone of growth but with so many different types of borrowing now available, it’s important for your business to carry ‘good debt’ rather than ‘bad debt.’
How to best prepare my company for a finance application
When preparing your company for a finance application, it’s key to present the business in its best light whilst also providing realistic projections, your plans for the funding, and how it will help the business grow.