working with businesses to improve potential, performance and lives
Raising Finance

Every business start-up needs finance. Or if an existing business wants to grow, finance is needed to fund development. Businesses can be financed in a number of ways, each with its own advantages and disadvantages.

Types of Finance
 Bank loans and overdrafts – provides you control but leaves you with lasting interest obligations
 Profit retained from your business can be used to finance expansion – this is cheaper than getting a bank loan but will reduce liquidity and can have cash flow implications
 Grants – from a variety of regional and national sources
 Venture capital
 Equity finance – gives you cash but you have to share the success

You need to consider the following:
 The amount of finance you need and when
 Sources of finance – costs and benefits of different options
 Current profits and reserves
 You must budget for all the costs and consequences of accessing this finance

Growth Finance
Success can bring a business to a difficult crossroads. Sometimes to take on more business and attain greater success, a company needs significant financial investment to acquire new machinery, staff or stock. New finance can ease the strain on your working capital when you look for growth.

1 Business Enterprise offers help to access funding for:
 Start-up capital
 Capital investment and refurbishment for existing businesses
 Training and Development

Carry out research and be prepared
In the current economic climate, banks have been accused of becoming increasingly risk averse and the stock of lending to non-financial companies has decreased. When applying for funding, either to banks or applying for grants you need to undertake research and be prepared.

First, consider all your costs and work out exactly how much money you need. Then, work out the type of loan you need. You might be after a working capital loan to cover a short-term cash flow problem; a fixed asset loan to purchase facilities or equipment; or a hire purchase loan to secure the long-term purchase of an expensive asset. The more closely the loan matches your circumstances, the better.

Make sure you shop around for the bank which offers the most favourable terms – and gives you the best chance of success.
Before you apply for funding, undertake background research on your market and the opportunities it presents. If you can show the bank that your business has money making potential, they’ll be impressed no matter what the company does.

When carrying out your research, think about the following questions:

 Is your market growing, and if so, by how much?
 Where is growth likely to come from in the future?
 What sort of market share can your company expect to achieve?
 Who are your competitors, and how are you going to take them on?
 What sort of industry trends will enable your company to expand?

The business plan is important to the success of your loan application. Your plan needs to make provision for failure as well as success, delivering detailed projections, and responses, for all eventualities.

Show the bank you’re thinking about the long term by including a detailed overview of your future strategy, and explaining how you will expand the business to meet these objectives. You can talk about diversification, product pipelines and international expansion.

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