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What Finance Options can your Business Access?

More great business ideas are left languishing in the minds of under-funded entrepreneurs than ever make it to fruition and that’s a tragedy. In the UK, we pride ourselves on being at the forefront of many industries and it’s true that there are many more ways to access funding for your projects than anywhere else, but some kinds of funding are not available to every business in every situation.

For example, retail outlets rarely have access to government grants, especially when they are a start-up business, but when the business begins trading, there are some options available in certain parts of the country. These usually amount to assistance to take people from claiming benefits into working life such as the plan by Jobs Growth Wales that guarantees the minimum wage for six months of any staff you employ in a new position.

Finance Options

Other schemes help you protect jobs and may make your business more sustainable during times of economic hardship. The trouble is that there are so many schemes and criteria to meet that funding a business with grants can be a fruitless exercise that costs you valuable time.

Mainstream Lenders

Local credit unions and banks are common sources of finance for small businesses, but many require detailed plans in order to obtain credit. In reality, you should always work to a business plan, whether you need it to prove your credit-worthiness or not, but for most people, the day-to-day operation of their business nothing more complicated than buying something cheap and selling it for enough to take a wage and pay some help. Your business’ product could be your staff’s time if your business is a service provider or it can be tangible products if your business is in the retail sector, but whatever you sell, you should work to a plan – If you don’t have the time, make it.

New Businesses

New businesses are unlikely to have much of a track record to prove that the figures on their business plan are more than imaginary numbers pulled from the sky. So this means the business can access money in one of three primary ways:

  1. Your own, Family or Peer Investment
  2. Refinancing Assets
  3. Invoice Factoring, which is rarely applicable to retailers

As you can see, options two and three are unlikely to be an option for many small businesses, which leaves people with no choice but to ask for help from friends and family, which is fraught with potential problems.

Established Businesses

Obviously, the options are more plentiful for a business with a proven history of making profit because banks will always lend to people who don’t need it and could raise the capital themselves if they only had more time. Recently, a new alternative lending scheme has gained popularity among small businesses especially those in retail because the lender takes gamble along with the business owner.

It’s possible to get a cash advance for your business based on the amount of trade your business does where customers pay by card. The reason the lender takes a gamble is because your business could fail could perform badly for a long time and because the investment from the lender (such as Liberis) is only returned as a percentage of sales made by card. This means your business may have hold on to the investment for much longer than any lender who provides loans would allow.


Shaun Thomas often writes on finance and business related topics for the small business community. He welcomes your comments or you can connect on Google+

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