Top Tips
Unravelling The Funding Minefield: Advice for SMEs
Sourcing finance can be a challenge for any small business, however, when
it comes to securing the funding to fuel business growth, purchase new
equipment or ignite recruitment plans, it’s crucial to research all
the options to avoid a costly mistake.
Specialist business
cash flow provider Bibby Financial Services believes many owners and
managers all too often only consider traditional finance such as bank loans
and overdrafts when financing their business. However, there are in
fact a number of other more flexible packages available.
Bibby Financial Services chief executive David Robertson said: “Securing
finance is all about flexibility and traditional finance options tend not
to be too strong on this front. Businesses would be wise to research
all the options on offer in order to avoid rushing in to an attractive deal
that might not be for the best in the long term.”
In order to help small business owners and managers make the best decision
when considering funding options, Bibby Financial Services has put together
the following tips:
-
Seek advice - there is a plethora of advice
available on securing the best funding for your business from a number of
financial specialists. Find a specialist who understands your business
and requirements and heed their advice before rushing in to any decisions
-
Involve funders from the outset – involving your funders
in the planning process means you can work together to ensure the right
deal at the right price
-
Be specific – decide how you are going to use the
funds. Funders prefer to know precisely what the money will be used
for and how it will benefit the business
-
Provide information – provide accurate and clear
information such as management accounts, details of contract orders,
assets to be purchased and any other information deemed relevant
Inform the financer – lenders like to know what the past, present and
future positions of the business will be
-
Realistic targets – don’t assume you will get the amount
you want at the price you want to pay. Planning for different
scenarios will help you to manage your expectations and avoid
disappointment
-
Advance planning – make sure you plan your borrowing
time line realistically, allowing some slippage time for unforeseen
events
-
Timescale – be aware some lenders take longer than
others to reach a decision, so make sure you build in plenty of time
before you actually require the funding
-
Create relationships – finance companies are people-led
service businesses, use this to your advantage and find the right partner
and build a long-term relationship
-
Communicate with funders – once funds are successfully
secured and borrowed, invite the lenders to see how their money has been
used. This generates confidence and trust, making further requests
for funding in the future a much smoother process
