Raising Finance for a Distressed Business

Raising finance for businesses with CCJ’s or are in a distressed manner is hard, we be honest with you. All is not lost as we work with lenders that are happy to help businesses trade out of the situation and are willing to lend to them.

Business directs and owners saying this type of thing. The single biggest reason small to medium sized enterprises in the UK struggle to grow and flourish is inadequate funding and cash flow, usually combined with a poor understanding of financial systems and control.

In our experience of raising finance business owners, shareholders and directors have been badly let down by the traditional lending model and the high street banks. Business banking for most SMEs is nothing more than a process and clearing facility for money in and money out.

Frankly it is embarrassing to ask a so called “business manager” at branch level for a loan when they have no real clue about what it takes to operate a business.

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The World of Business Finance has Changed

The world of business finance has changed and the enterprising business owner, shareholder or director has many more choices and opportunities to secure funding for his or her business.

Most successful high performance businesses have a well capitalised and funded operation and the funding is the critical success factor in many business models. So if you’re struggling, give us a call and let us discuss what finance options are open to you.

We have access to a wide range of business funders, and understand what they like and don’t like and what you need to do to secure funding. In this way, we save our clients time and disappointment by ensuring we match your their with the right funding solution.

We work our hardest to ensure our are our clients can have access to the type of Business Finance they need. Raising finance investment that they need to support and manage the financial control function for their business.

Interim Finance Directors can be offered in which we work with the senior teams of all the major high street banks, private banks, and commercial lenders. As part of our business group we have one of the largest business finance brokerages. This ensures you the the business funding you need to grow in a timely manner.

Many businesses struggle from cash flow problems and raising finance. We have helped hundreds of distressed business become stronger, more focused and generate better profits and cash. Not only will we help you now but we will also ensure that your business is stronger for the future

Sources of business finance

 The days of only being able to get hold of funding from a high street bank are officially over. People have many different places to go and a large number of options to consider when searching for business finance in this current day and age.

Now in 2021, the number of places business owners can acquire business finance from has dramatically grown from just a few years ago. This means that discovering the ideal financial solution for your business is now far easier than it ever was in the past. You can also use funding for a huge variety of reasons, such as keeping your business afloat, hiring new staff members or funding projects.

In case you still are not aware of what is available to you within the realm of business finance and how it can benefit your unique situation, we have developed a list for you to view. The following money solutions are all tailormade for differing scenarios, so understanding what they are and how they work is essential to any business owner in need of extra cash.

It does not matter whether you are a limited company, sole trader or an independent business owner, there are many finance sources that could help you to save your business from facing insolvency.

Without further ado, here is our list of business finance sources that are available to small business owners today. We will give you both the pros and cons to each in order to award you with a fair and clear view of each source of finance.

Bank loans 

Bank loans are pretty much the most traditional method of lending money for any business. Banks will lend companies money based on their value, the likelihood of it being paid back in full and the business plan it is currently working under.

This is best suited to companies that have a positive credit history and are in need of a lump sum of cash. If you need the money to come through instantly, a bank loan is unlikely to be the best solution for you, as the process can become rather lengthy.

Positives –

With a bank loan you know you are getting a legitimate product that is both reliable and trusted. You’ll be able to receive excessive amounts of finance over longer periods of time, which also often come with pretty reasonable interest rates. If you need to make costly purchases or make large expansions to your business in some way, this is a decent method to investigate.

Negatives –

Borrowing money from a bank isn’t really designed for smaller businesses, so they often struggle to achieve the desired effect when taking out a loan from a high street bank. These loans can also be rather difficult to obtain unless you have a perfect credit history and a large amount of time on your hands. Be mindful that when attempting to get hold of a bank loan, there will be some extremely rigid terms and conditions to deal with.

Merchant cash advances

A Merchant Cash Advance is a short-term funding solution that is perfect for smaller sized businesses and independent retailers in the UK. Instead of making payments at a fixed monthly rate, you’ll be paying back an agreed-upon percentage of your customer card payment takings. This means that you’ll only be paying the loan back when you’re making money as a business, which is ideal for seasonal ventures with a varying success rate throughout the year.

This method of funding is best suited to seasonal businesses that experience varying customer interaction rates throughout the year and companies that need short-term funding that is easily repayable. You should know that it doesn’t matter if you have a negative credit history when it comes to Merchant Advances, as you can use your card takings as security.

Positives – 

This source of finance comes with a single fixed amount to repay that never changes, so you’ll always know exactly how much you owe and how close you are to fully repaying the loan. Also, repayments are very flexible as they’re based on the money you earn as a business through your customer card sales (cash takings are unaffected).

When your business begins to earn higher profits, you’ll make repayments faster and therefore owe money for less time, whereas if you’re currently struggling to make sales, you’ll have a far longer time to make repayments.

When repaying a Merchant Cash Advance, you’ll never have to worry about hidden fees or charges, as there aren’t any.

Negatives – 

Your business is required to have a minimum amount in customer card payments per month, in order to be eligible for a Merchant Advance.

Business credit cards 

Business credit cards are ideal for busy firms, which are in a hurry to get hold of cash and use it for everyday purchases. This convenient source of business funding is a great way to top up your stock, purchase new equipment and more. However, it can leave you open to fraud and theft in certain situations.

Positives –

Business credit cards are an easy way of gaining funds when you’re desperate for more resources. The application process isn’t normally all too lengthy and you can normally get your cash fast here. It is also worth knowing that this method of funding doesn’t put your assets at risk, thanks to the fact that it is unsecured. As long as you keep up your repayments and cover all of your transactions in full and on time, the costs should stay relatively low for you.

Negatives –

Business credit cards are often viewed as a risky way of financing a business venture; this is because of a few key reasons. Interest is normally heightened and can stack up quickly if the balance is not paid on time. This leads a lot of people into a trap of always having more money to pay off, which is difficult to break out of.

You should also know that a business credit card is also better used when spending smaller amounts. Therefore, if you are looking to make more costly purchases with it, you should consider the other options available to you, as this will not get the job done.

Furthermore, you can end up with a negative interest rate if you go over your limit or make repayments late. With this in mind, you should think long and hard before taking out a credit card simply because you see it as a hassle-free funding method.

Invoice Factoring

Invoice Factoring  is a source of business finance which helps to release working capital that is currently locked in outstanding customer invoices. This style of funding is often used to help fund expansion plans, improve cashflow and collect payment from customers more efficiently.

There are two main types of funding options: factoring and discounting. With factoring the factors provides both funding and credit control. Invoice factoring is simply a way to release the funds that’s tied up in your unpaid invoices. Instead of waiting for your customers to pay, you borrow against the money you’re owed and is a type of debt financing.

Positives – 

This financial solution comes packed with a great deal of flexibility. The amount that a business can borrow increases as sales increase. Furthermore, the loan is unsecured, which means that your property will never be at risk, as it may well be when taking out a high street bank loan. One other benefit of Invoice Factoring is the outsourcing of operations when collecting payment from your suppliers, as the factoring company takes this on, as well as the risk of them not paying on time or at all.

Negatives –

Factoring can be risky in certain situations as the factors legally own your own debts, meaning any invoices you raise are counted as their assets.

Crowdfunding

Crowdfunding has most certainly grown in popularity over the past couple of years, though it is not an easy way to get cash. With crowdfunding, unless you have a large audience that’s ready to back you up financially, it could be a very frustrating and tedious source of finance.

Positives –  

A perfect history of credit is not a requirement for this type of finance, so if you’re failing to secure a loan because of poor credit, this could be a useful alternative. Also, if you manage to create a positive campaign that receives a lot of donations, you’ll be building hype around your business, which is something that was always come in handy.

Negatives –

Raising funds through this source of funding is extremely difficult. As we have previously mentioned, if you do not have an audience ready and willing to support you, it will be a struggle to get your message in the ears of the right people. This can be a long, drawn-out process and often end in failure. But, if you are in the right position to pursue it, then it may well be worth a try.

Asset Finance

Asset finance is a source of finance that enables you to access things your business may need, such as equipment, machinery and vehicles. This can be a big money saver for a period, as you will not have to cover the complete cost of these items upfront.

This sort of finance is usually aimed at firms that want to put their growth plans into action but don’t necessarily have the cash to do so right now.

Short-term asset finance enables businesses to keep up with the competition within a sector by making it easier for them to access the latest equipment in their industry, etc. Asset finance covers a broad range of things that may be useful to a business venture in the UK.

Positives – 

Asset funding does what it says it does on the tin. It opens funds for you to purchase the things your business may rely on, which is useful for companies all around the globe. if you need new equipment, company cars or machinery, this may be the perfect solution for you.

Negatives – 

This financing method seems to always be on the more expensive side, often three to five percentage points more expensive than a typical commercial lender. Relying on short-term assets for long-term debt is most certainly not advised.

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