Expanding your business, or starting a new one, you will need to raise some finance in order to operate. This requires careful planning and good professional advice.
We advise spreading your commitment over a number of finance sources (ie banks, investors etc.).
This will give you greater flexibility in the longer term. Common sources include
- overdrafts / business loans
- selling an interest to a partner
- share issues
- hire purchase or leasing
- debt factoring
- assistance from Government-backed schemes
- VC or venture capital involvement
Nothing is free
It is important to do a comparative study of the costs of accessing capital from all of the above 8 sources and to consider any tax implications before making a final decision about who to approach. This is an area where we have considerable experience, networks and expertise.
Lenders will require some form of security, if you won’t risk anything then should the investor?
Generally acceptable forms of security include:
- charge over a specific asset or class of assets e.g. car / debtors / stockl
- fixed or floating charge over your business assets
- second mortgage on your home or property
- personal guarantees where you stand personally liable for a debt
Advice: You might consider using more than one form of security to spread the risk
- If the lender requires personal guarantees you should proceed with great caution
- . Try to ensure that any such guarantees are limited in amount, if not in time. You should also consider insuring the risk. You will almost certainly be required to present a comprehensive and convincing business plan to show how you are going to service the loan. In essence, this must demonstrate that you will be able to meet the new commitment through sustained growth in your business.
- In all three areas – choosing a finance source, securing the finance, and preparing a business plan – you will benefit greatly from our professional advice. Why not arrange to meet with us and take advantage of our in-house expertise and extensive network of contacts? We might even be able to help you refinance your existing commitments to your advantage.