5 pathways for re-energising your business’ growth

At the centre of any successful business lies a strong vision and the determination to see it into fruition. But as your business develops and expands, going forward with the same tenacious enthusiasm and determination can be difficult. As well as inspiring your team to give their all, you also need to keep a close watch on how your business is growing through each stage of its development. Naturally, the biggest obstacle standing in your way is likely to be ensuring you have access to sufficient amounts of capital. However, there are many pathways available that could help your business gain the funds it needs to achieve further growth - you just need to choose a solution that is suitable.

Business Loans

When considering finance for your business, business loans will, no doubt, be one of the first things that spring to mind - and for good reason. Business loans are typically termed as being either Secured or Unsecured, and offer you access to a lump sum on a short- (up to 3 years) or long-term (3-5 years) basis. Subject to no usage restrictions, business loans are a popular option if you’re looking to achieve anything from a cash injection, equipment acquisition and refurbishment to premises extensions.

However, the amount of cash that your business could borrow can vary. Secured business loans typically allow you to borrow between £5,000 - £1,000,000, whilst requiring you to present unencumbered assets (equipment, machinery, vehicles or property) as security. Meanwhile, unsecured business loans often can provide anything from £5,000 - £250,000 without the need for security.

Thinking about expanding the size of your operations? Or is it time you started establishing your presence in other markets? Apply for Small Business Finance today or learn more about how your business could benefit.

Peer-to-Peer Lending

Another popular pathway for small business owners who are seeking to re-energise their business’ growth is Peer-to-Peer Lending (Loan-based Crowdfunding). Typically short-term, unsecured and quick to set up, Peer-to-Peer Lending presents you with a decisive way of raising funds by enabling you to appeal directly to investors across an online platform. Through creating articles, videos and hosting live discussions, your aim is to show investors that your business has the potential to grow and earn them a return on their investment. As such, you may need to present details such as your annual turnover, Profit and Loss statements, trading history and credit profiles (business and personal). If you meet the platform’s criteria and are able to convince investors, they’ll join a panel and pull their money together to create a lump sum.  

Invoice Finance

If your business trades using business-to-business (B2B) invoices, you could release up to 90% of the capital they contain by applying for either Invoice Factoring or Invoice Discounting. Subject to little or no usages restrictions, any funds that you gain access to can be used for purchasing supplies, subsiding revenue, equipment or any other growth projects. Keep in mind that you’ll need to maintain up-to-date ledgers as a condition of this type of finance. But in order to make an informed decision, must be aware of how both options work.

• Factoring: this option may be appropriate if your business has an annual turnover of at least £25,000. It can even help save you time by allowing the lender’s credit control team to pursue the debtor on your behalf. Plus, some lenders may offer you Bad Debt Protection, safeguarding your business in the event that debtor goes bankrupt or doesn’t pay what they owe.
• Discounting: another option you could use if your business has an annual turnover of at least £100,000 is Discounting. With this product, you’ll be responsible for collecting the debt from the debtor. However, instead of paying you, they’ll pay into an account controlled by the lender. Once they’ve fully paid off the money they owe, the lender will release a balance (e.g. the remaining 10% of the invoice) minus costs and fees.

Overdraft Replacement

Another quick way of obtaining funds for stimulating growth is by applying for an Overdraft Replacement. Offering your business a line of credit, Overdraft Replacement gives you access to an allowance which is based upon your past income. Although you’re not obliged to use any of the funds that are made available to you, anything that you do withdraw will be charged interest and must be repaid with 30 - 90 days (depending on the agreement). This enables the product to behave much like a credit card and provides a capital buffer for your business. Because it’s not subject to any usage restrictions, Overdraft Replacement can be used for a wide range of purposes including subsidising revenue, tax, staff wages, funding existing projects and supporting growth. If you withdraw more than that what the allowance provides, the lender will impose an overdraft penalty, however, once you’ve fully repaid what you’ve withdrawn, you can instantly draw and repay funds on a revolving cycle.

Asset Finance

Finally, if you’re looking gain access to new and used equipment for your business, exploring what Asset Finance might be the answer. If you’re a small business owner who’s looking to expand the efficiency and effectiveness of your day-to-day operations, there are two types of products available: Leasing and Hire Purchase.

• Leasing: enables you to borrow equipment for a limited time over an agreed term, typically lasting up to 5 years. However, if the equipment is particularly expensive, some lenders may be willing to extend the agreement to 7 years. During the course of the agreement, you will need to make fixed monthly rental payments, plus interest. These payments are calculated by taking into account the equipment’s purchase price and its predicted worth when the agreement matures. Plus, at the end of the agreement you have 3 options: return equipment, extend the lease or upgrade to another model.

• Hire Purchase: this, on the other hand, enables you to spread out the total purchase price of a piece of equipment and eventually become its owner. It begins by the lender first purchasing the equipment from a trusted supplier on your behalf. But in order to gain access to the equipment, you’ll need to pay an Initial Deposit. This involves the equipment’s full VAT and around 10% of its total purchase price (note that this is subject to negotiation, so the size of the deposit can vary.) As soon as it has been settled, you can begin using the equipment in your business whilst making fixed monthly repayments over an agreed term (usually up to 5 years), plus interest. Once all relevant payments have been made, the lender will transfer ownership of the equipment to you.

Re-energizing your business’ growth?

As a business owner, you can never afford to rest on your laurels - you must be constantly looking for ways to grow your business. Although you may have plenty of ideas you’ll want to start working on, acquiring the necessary tools and capital to do so isn’t easy - if you don’t where to look. If you’re to looking to re-energize your business’ growth and stay ahead of your competitors, there are plenty of Alternative Finance solutions available that could help you achieve your goals. So the time to be bold in your vision is now.

At Rangewell, we’re an Access to Finance specialist working with over 350 lenders to offer you a comprehensive overview of more than 23,000 business finance products. Our services are free to use and we’ll also guide through the entire application process. We’re with you every step of the way. So if you’re looking for a suitable finance solution to enable your business to grow and prosper, apply for Small Business Finance today or find out more with Rangewell.