We recently wrote a couple of articles about finance acronyms (The Finance Jargon & What Does It Actually Mean & More Financial Jargon Translations). This was as a result of many companies contacting us as they were struggling to understand and navigate through all the financial jargon. The same can be said about researching options for business finance. Of course, the majority will simply search for a business loan but is this always the right choice and what other options could be available?
There are actually a number of alternative solutions to the traditional business loan:
Working Capital Loan
This is a diverse funding option which has been designed to help businesses better manage their cashflow. It is an ideal choice for being able to cover VAT returns, corporation tax, recruitment costs and annual licences
As the name suggests this type of funding is utilised to purchase business assets, this can range from office-based equipment through to agricultural machinery. In essence it can fund any asset that a business will benefit from and there are flexible financial options which include hire purchase and finance lease.
Waiting for payment can be one of the most difficult challenges a business can face. Keeping cash flow levels high is really important and that is where invoice finance can be so beneficial, it is also unique as there are no monthly repayment fees. Basically, money is received as soon as an invoice is raised, when the final invoice is paid the lender collects their fee.
A similar concept to invoice finance, stock funding will provide a credit facility against a business’s stock. In essence it bridges a gap between the time stock will sit on a shop floor to the time it is purchased by a customer. Money no longer must be tied up in stock, its equity can be released and other areas of the business can be focused on.
For any new business cashflow is king. Of course, business and financial planning is critical but there will always be an unexpected purchase which cannot be accounted for. That is why taking advantage of a start-up business loan, even if you feel it is not initially needed is so important.
In summary there are several alternative funding solutions available in addition to the traditional business loan. If you need a little help or would like to find out more, please call us on 01993 706403 or e-mail firstname.lastname@example.org.