Growth-Focused Financing: How To Secure The Right Funds For Your Business

Organisations of all sizes rely on growth-focused financing solutions, backed by efficient financial management, to improve their operational efficiency and foster long-term growth.

Initially, business finance often takes the form of equity contributed by founders. Additional equity may be contributed by external investors later. However, at some stage nearly every business will need one or more business loans.

Business financial lending can take the form of short-term business loans to smooth out bumps in cash flow or cover unexpected expenses. Long-term business loans are more likely finance options for equipment purchases, or for a business acquisition or major expansion. But there are many more business finance options in the rapidly evolving financial lending landscape.

Competitive lending arena is a bonus for businesses

Traditional major banks are currently experiencing considerable upheaval stemming from technological advancements, slow global economic growth, regulatory changes, cybersecurity threats and fraud, as well as open banking and digital currencies. As a result, the banking landscape is increasingly competitive, opening up a range of new business finance and lending options to counter high interest rates or loan qualification hurdles.

Key drivers for seeking new business finance options

Business loans are used for a variety of strategic and operational reasons. Here are some of the most common:

• Acquisitions
  Buying another existing business, such as a direct competitor or a source of market diversification, is one of the most straightforward avenues for growth.
• New business premises
  Your growth strategy may require you to purchase or lease larger premises in a more convenient or competitive location.
• New equipment
  Outdated plant, machinery, vehicles and other fixed assets may be holding you back and need to be replaced.
• Keeping up with technology
  In order to stay competitive, improve processes and contain costs, your business will need to invest in the latest technology, such as cloud computing, customer relationship management (CRM) software, an ecommerce platform and enhanced cybersecurity.
• Staff
  Recruiting and retaining the best talent is fundamental to business success, but it comes at a cost. You may need temporary business finance to enable you to promote, reward and incentivise your best people.

Explore your business finance options
Before you go down the conventional business finance route of a term loan, take time to consider more flexible and practical alternatives.

• Traditional bank loan
  Short-term or long-term business loans from your regular bank may seem like the obvious choice, but it won’t necessarily be the cheapest or most most suitable for your needs. It can be difficult to qualify for a conventional loan, and to meet the regular repayments. However, the interest rate is usually fixed – meaning repayments are predictable – and the loan terms are often longer than those available with other forms of lending.
• Line of credit
  Much like a credit card, a line of credit allows you to withdraw funds from a financial institution up to a certain limit, with the advantage of only paying interest on the cash you need rather than a predetermined loan amount.
• Equity financing
  Venture capitalists may be prepared to back a business with growth potential. Wealthy angel investors sometimes take risks on companies in the early stage of their development. These investors pay cash to purchase shares in your company. Although you don’t have a debt to repay, or interest charges, you will surrender some of the control of your business.
• Debtor invoice financing
  You may have a lot of cash tied up in your debtors’ ledger. Instead of waiting for your customers to pay, you can use outstanding invoices as collateral against a cash advance from a business finance company.
• Peer-to-peer lending (P2P)
  P2P lending allows businesses to borrow directly from an individual with cash to spare, cutting out the financial institution middleman. It is facilitated by P2P websites, and comes with higher interest rates for businesses who would not qualify for a traditional loan.
• Crowdfunding
  If you have a new business or product idea, you could post it on a crowdfunding website to attract donations, or a large number of small investors or lenders.

Proven strategies for securing business finance
Taking steps to enhance the appeal of your business before you approach a lender can make a big difference when it comes to securing the business finance you’re seeking. Don’t overlook these strategies:

• Business plan
  A comprehensive plan outlining your business operations, goals, strategies, and the loan’s purpose and expected ROI, will give the lender or investor greater confidence.
• Credit profile
  A strong credit profile, including timely repayments, current low debt levels and a good credit score, reflects your creditworthiness and financial responsibility. It will increase your chances of approval and may reduce the offered interest rate.
• Leverage financial advisors
  Financial advisors bring expertise and experience to the table, helping you understand the best business finance options. They can assist in preparing documents, improving credit profiles, crafting a compelling business plan, navigating choices and making informed decisions.

Take advantage of your business advisor’s finance and lending connections. Get in touch with Bentleys’expert financial advisors today to discuss your business finance options.

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Disclaimer: This information is general in nature and should not be relied on as advice. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs and seek professional advice before making any decisions based on this information.