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Funding options The type of funding your business needs will depend on what growth stage your business is at and what the funding is required for. We will work with you to identify the products and providers most suitable to your business. Listed below are the most common types of funding with a brief description. If you require detailed information on any particular option please contact us.  Equity
Raising equity finance involves selling ownership of part of your business to the investor. Unlike loans there are no monthly repayments or interest charges, but the investor will seek repayment (exit route) at some point in the future, and expect a significant growth in the value of those shares. Typical sources of equity are Venture Capital Institutions, Business Angels and friends and family.
 Debt
Traditional debt solutions, loans and overdrafts, are often the first (and only) option considered by business. However due to the costs and security requirements they are not always the best solution. Overdrafts attract higher interest charges and are really only suitable for occasional short term use. Debt finance typically requires security and/or personal guarantees, although in some cases this can be offset through the Small Firms Loan Guarantee Scheme where 75% of security is provided by the Government.  Asset Finance
A specilised form of debt, asset finance is used to fund the purchase of specific assets, and secured against that asset. The two main types of asset finance are leasing, hire purchase and commercial mortgages. How much you can borrow relates to the likely value of the asset over the period of borrowing. In some cases lenders will seek additional security eg personal guarantee.  Invoice Finance
Invoice Finance or Factoring is a complete credit management solution which advances up to 85% of the sales invoice value and the provider is responsible for credit control and cash collection. Invoice Discounting is a similar solution but you retain the responsibility for collecting the cash and therefore can be a more confidential service, although the stigma associated with Factoring is largely dissappearing as more and more companies see it as a solution. While it can be an expensive solution many companies enjoy their lending facility grow in line with their business growth.  Trade Finance
While often overlooked your customers and suppliers may offer the potential for a significant cash flow boost. By either increasing sales, increasing prices (or reducing prices to increase volume) or taking payment, or part payment in advance you can significantly improve your cash flow. Similarily suppliers offer opportunities through, eg extending credit terms from 30 to 60 and sometimes even 90+ days. In some cases, particularly turnaround situations, customers and suppliers may consider equity/loans to ensure the business ongoing success.  Grants
Government agencies and other not-for-profit organisations offer a range of support such as grants or soft loans. The availability of these depends on a variety of factors eg geography, industry sector, employment levels etc but can be a useful source of finance, particularly if your business is suitable for some of the EC sponsored grants which can provide substantial awards up to 30% of the project value. |
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