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Business financing tips

Financing your business is critical – it provides the wherewithal to purchase the supplies and materials you manufacture or sell, the premises from which you operate, the equipment and machinery you need, the tax liabilities that have to be met and the staff who must be paid.

That business finance typically comes from:

  • the profits generated by your trading activities;
  • investors who provide finance in return for a share in the fortunes of your company – equity finance; and
  • business loans – by way of the many types of debt finance described in the Business Finance Guide published by the Institute of Chartered Accountants in England and Wales (ICAEW).

In a rapidly changing and keenly competitive business environment, business finance frequently needs to be found quickly and smoothly, capable of being managed and controlled with the minimum impact on your ongoing cashflow concerns.

For those purposes, your easy access to suitable business finance when you most need it is likely to come from business loans – so, here are some business financing tips:

Cashflow reigns

  • whenever you take on additional debt finance, consider the impact of the repayment schedule on your day to day cashflow – cashflow management remains the critical objective in running a successful business, especially when there are business loans or other forms of credit to repay;
  • some specialist lenders, therefore, unlike the standard approach adopted by many banks, might concentrate on matching and tailoring the repayment schedule of any business loan to your current and ongoing cashflow circumstances;
  • the central theme of cashflow management is likely to be recognised by those lenders who share similar roles as entrepreneurs to yourself and are able to identify with the concerns and objectives that drive your business;

Supporting your application for business finance

  • consider how much supporting information you might need to supply to back up your application;
  • traditionally, for instance, banks have insisted upon an exhaustive business plan, a comprehensive cashflow analysis, a forecast of your profit and loss, and a face to face interview with the bank manager responsible for making the decision – suggests the Entrepreneur Handbook;
  • gathering such supporting material takes time – and expense – and in today’s fast-moving world, these may be luxuries the immediate demands of your business simply cannot afford;
  • therefore, you might want to choose a lender providing online applications – with simple and straightforward interaction through the internet and telephone helplines;

When fast means fast

  • by streamlining the application process and conducting your entire application online, therefore, some lenders are able to give you a decision in principle almost the moment you first make an enquiry about the amount you need to borrow and the period over which you want to repay it;
  • consideration of your formal application – and gathering the information needed to carry out the necessary credit checks – may also be conducted entirely online, so that if and when approval is granted, the requested funds may be electronically transferred directly to your company bank account within just 48 hours or so.

The main tips on business financing, therefore, boil down to choosing a provider capable of responding to your immediate needs and requirements, on the strength of only essential supporting information, which puts the impact on your cashflow of the repayment schedule first and foremost.