5 ways to raise finance for your business

Whether you’re starting out in business, thinking of expanding, or just need to get through a rough patch, raising finance can be difficult – and can often come down to ‘who you know’. At our A4G Growth arm, our partner Will Richardson helps business Owners, wherever they are in their business journey, to access trusted finance funders, providing tailored advice on the best options.

So, what are the options?

If you’re facing a short-term cash flow problem, you could look into:

  1. Loans and Overdrafts

Where any cash flow issue is anticipated to be short term, and you have a reasonably good credit rating, it may be possible to approach the bank for a loan, or an extension to your existing overdraft. Generally, loans will be more cost effective, because the interest charges are lower, although most lenders would wish to lend over a period in excess of 1 year. Where the cash flow shortfall is expected to be under 6 months, it may be more beneficial to go down the route of the overdraft extension.

  2. Factoring and invoice discounting

Both Factoring and Invoice Discounting are options can get instant access to cash tied up in invoices, via a bank on specialist provider.

There is a costs to both Factoring and Invoice Discounting, and the cost really depends on what you need, for how long, and who you’re opting to make the arrangement with (a bank, a specialist provider).

This is why we connect our clients with Will Richardson, our partner at A4G Growth. He can contact bank managers, and his own professional contacts in this field in order to get you access to the best option for you.

  3. Asset Finance

Asset finance is a cashflow solution that uses your assets as a security to borrow money against what you already own. Depending on your business, assets could be commercial vehicles, machinery, equipment, and even buildings.

Sale and leaseback allows you to sell back that asset to a bank or finance funder in return for cash, to be replaced by a monthly rental payment. This will come at a cost, but it may help as a short term injection of cash into the business when you’re having cash flow issues.

This is only a recommended option if you’re able to ensure that repayments can be met.

  4. Peer to peer lending

Peer to peer lending is operated by a number of internet-based platforms designed to cut out the middleman (i.e. the banks) between lenders and borrowers. The most well-known of these is Funding Circle which a number of clients use. Businesses can advertise their proposition on the platform and potential lenders can “bid” to lend money to that company.

Lenders get the benefit of a better rate of interest than they might get on deposits and borrowers can either borrow money that a bank was not prepared to lend or benefit from a lower interest rate than they would otherwise pay.

The downsides of this form of lending are the time it takes to put together your proposition and the fact that most platforms require the owner-manager of the business to provide personal guarantees.

  5. Equity Finance

Equity finance is a method of raising capital by selling shared in your business to external investors. If you’re a young company, you may look to sell shares to a Business Angel – a wealthy individual or group making use of their finance by investing in start-up or early stage businesses.

Choosing an investor is about more than just cash. The right investor can help you to achieve growth by sharing their own experience your sector and offering strategic guidance to drive success.

Finding a Business Angel isn’t the only avenue to take. There are a wide variety of options for obtaining equity finance, depending on where your business is at and the industry you work in.

We’re often asked the best way to finance a business in order to get established, or to drive growth. But in truth, the answer really depends on you and your business. This isn’t a one size fits all situation, and you need access to the right people for your specific requirements.

Would you rather spend your time stumbling in the dark dealing with paperwork and red tape, worrying that your application may be unsuccessful? Or use our knowledge and experience, and take advantage of our contacts? We can take the whole process off your hands and let you focus on your business itself. On doing the bits that you love.

Fill your details in below and let us know a little about your business needs, so that we can find the best solution for you.