Business Finance Options for Paisley’s Small Business Owners

For business owners large and small, money is an ever-present concern. It’s needed for all kinds of activities, from paying staff to expanding product lines. But securing money when you need it can be a challenge.

With the help of business finance expert Jason Andrews at Lending Expert we’ve compiled 6 examples of different types of financing options you that could prove useful in your business.

1. Bank Business Loans

Although the credit crunch in 2008 briefly put a stop to bank loans as a viable source of finance, now that they have been recapitalised, they’re back in the market, providing business loans to enterprises. Bank loans can be a good option for some business owners, especially those with excellent credit scores, because of the relatively low interest rates. But the problem is forging a relationship with the bank in the first place.

Banks want to know that they are going to be paid back and that you have a viable business with profit potential. Convincing banks of this fact can be a time-consuming process. Often you need a loan right now, and so going through the traditional banking system can mean that you either miss opportunities or can’t afford to meet your obligations. However, if time is on your side, bank loans are still a reasonable choice.

2. Invoice Financing

Sometimes customers don’t pay on time. It can be frustrating and lead to short-term cash-flow issues. The good news, though, is that there are companies that are willing to buy your accounts receivable (money you’re owed from customers who have not yet paid), providing you with a cash injection up front.

There are costs to this: the factoring company will charge a fee for the service. But in some circumstances, invoice financing can get you out of trouble, especially if you think payment is still weeks away.

3. Crowdfunding

Crowdfunding relies on the internet to connect groups of lenders with a single borrower. Lenders benefit because they can offer small sums of money to many borrowers and spread their risks. Borrowers win too because they can get their hands on large unsecured loans without having to jump through the usual credit check hoops.

Crowdfunding is great for businesses with an exciting product or project that people care about, particularly things like video games. But this source of income may not function well for companies with less inspirational products, especially those that struggle to generate buzz. Furthermore, it can take time to build publicity, during which, the opportunity may have passed. Thus crowdfunding might not benefit everyone.

4. Peer to Peer Loans

5. Merchant Cash Advances

A merchant cash advance (MCA) is a relatively new form of business funding. Businesses that use point-of-sale terminals can borrow money more easily because lenders can track their moment-by-moment cash flow. These advances are particularly useful for firms without a substantial credit history: lenders can simply assess the point-of-sale history of the company and decide how much to lend and at what rate, there and then. Repayment plans reflect how much money a business is likely to make based on POS sales.

6. Asset Finance

Growing businesses often have significant capital requirements. Tesla, for instance, has spent more than $5 billion on Gigafactory 1 to produce batteries it needs for its electric vehicles. Asset finance is a particular kind of secured loan that businesses use to get the equipment they need for production. Rather than paying upfront for the asset, asset finance allows companies to spread the cost over a fixed term.

Asset finance can work in two ways, either allowing companies to lease equipment and roll over financing at the end of the term, or hire purchase, where the business owns the product after completing the hire term.

In summary the good news is that there are plenty of finance options available which provide various advantages. Some you may be familiar with, while others could be new, but all can play a part in helping you to expand and grow your business.