Energy News – 24/02/2017
What’s been making headlines across the energy world this week? We round up the big stories from the las...Read More
After several years of limited access to finance, the funding situation is gradually improving. “The current climate is more positive in the business lending sector with the growth of the challenger banks and less traditional funders such as crowdfunding services providing both competition for the major banks and real choice for businesses,” says Lee Tillcock, editor at financial analysis business Moneyfacts.
But numerous options will need to be explored before the right funding lines are found, says Tillcock. “Businesses should discuss their requirements with commercial finance brokers and/or their accountants to ensure that all lending possibilities are being considered.”
Banks are the most obvious place to start, although they can still be reluctant to lend to smaller firms.
“There are various ways banks will lend, such as invoice discounting or lending against your assets,” says Rob Donaldson, head of corporate finance at accountant Baker Tilly. “These ways are perceived as safer than something like cashflow lending, which is the equivalent of an unsecured personal loan.”
The rate of interest can vary significantly depending on what level of risk you are assessed as having and how much you want to borrow.
Online lending and investment platforms are becoming a more acceptable way of helping businesses obtain debt and equity funding using money from individuals. These peer-to-peer (P2P) networks include the likes of FundingCircle.com and often prove less risk averse than the banks.
On equity crowdfunding platforms, you publish details of your business, how much money you need and why, and what investors will get in return.
P2P lending, on the other hand, involves your company being given a risk rating, which dictates the interest rate you pay. A pool of private lenders will then provide your firm’s finance – the riskier you are, the higher their returns will be.
Recent figures from FundingCircle.com show the platform lent £46 million to small firms in the third quarter of last year. In comparison, Lloyds Banking Group – the UK’s biggest lender to small and medium-sized enterprises (SMEs) – lent £304 million over the same period.
Other equity options include venture capitalists and private equity firms, which can inject money into your company in return for some form of a share of ownership in your business. “This means the investor gets a share in the upside for your business,” says Donaldson. “But giving up equity doesn’t always mean giving up control.”
Contact the British Private Equity and Venture Capital Association (BVCA) for more information.
A number of Government-backed programmes aimed at funding growing businesses are available but these vary by sector and region. The Business Growth Fund, for example, aims to channel bank money to growing firms and will give you some ideas of what opportunities are available.
Excellent communication and help
"The service was always efficient, emails were tesponded to quickly and efficiently. Would definitely recommend"This review was posted by Nella Mcgregor on the 27th of February 2017
"Jessica Purnell was great, she was helpful and everything was easy. I have saved £150 per month! many thanks Jess :-)"This review was posted by Melanie Baker on the 23rd of February 2017
Thank you Jess Purnell!
"Jess really helped us out with switching suppliers... she wasn't pushy at all and the service was great. Thanks again!"This review was posted by Becki on the 23rd of February 2017
Thanks for your help Mark Weeks and Switch My business
"I would like to thank Switch My Business and particularly Mark Weeks for the ease of switching and saving me money! I can highly recommend them. Thanks again Richard Blake"This review was posted by Richard Blake on the 22nd of February 2017
"Aaron sorted out a new electricity deal for my church, enabling us to make good savings. We have now received confirmation of our new 3 year plan.During our telephone conversations Aaron was always very polite and efficient. Dawn Marskell"This review was posted by Dawn Marskell on the 21st of February 2017