Can debt be used to help grow your business?

Published on 13th June 2018 - Last update on 2nd September 2019

No matter what stage you’re at, you need to be constantly driving forward and finding more ways to successfully grow your business. Yet regardless of whether your plans involve refurbishments, marketing, acquiring new equipment or anything else your business may need, an obstacle you’re certain to be aware of is the matter of funding. But what you might not know is that you could raise capital using debt. Although it may sound outlandish, possessing manageable levels of debt can indicate prosperity and there are plenty of finance solutions available that can help turn it to your advantage.

What is working capital?

In order to make money, you need to spend money. This is absolutely true when running a business in the UK. But what you must appreciate is the need to maintain positive working capital levels whilst performing your day-to-day operations. If your business is spending more than it's able to generate in monthly revenue, paying for necessities such as stage wages, inventory, business tax, utility bills to insurance premiums will become a struggle. Unfortunately, this is a common problem for many small businesses that are experiencing rapid growth. Your existing revenue might not be sufficient or stable enough to handle further growth, whilst your business’ internal infrastructure may be underdeveloped. Should this continue, you risk running out of money and having no choice but to limit trade, lose customers or turn down vital contracts.  

However, rather than letting your business slide backwards under its own weight, the secret to success could lie with your business’ debts. There is a variety of finance solutions available that are enabling small business owners to raise funds at short notice using their working capital. So if you’re looking to shore up your business’ foundations or hold off the effects of fluctuating revenue in order to support growth, help is available - if you know where to look.

Got a vision for your business you want to see into fruition? Need help managing your business’ working capital expenses? Apply for Working Capital Finance or learn more about how your business could benefit.

What finance solutions are available?

Shelving growth and being forced to turn away paying customers is something no business owner wants. But if your working capital continues to go unsupported, you may have no alternative. Fortunately, there are a number of finance products that could prove invaluable in managing this crisis before it gets any worse. These include Invoice Finance, Merchant Cash Advance and Overdraft Replacement.

Invoice Finance

Missed payments from your customers can be problematic, but Invoice Finance could offer you a solution. If your business trades using Business-to-Business (B2B) invoices worth in excess of £5,000, you could release up to 90% of the capital contained in them. After the debtor has fully paid what they owe on the invoice, the lender will then release a balance (the remaining 10%) minus any costs and fees. Plus, any capital that you do release isn’t subject to usage restrictions, meaning it can be used for anything from revenue support, business tax, refurbishments or anything else that your business may need.

Merchant Cash Advance

If you need capital fast, you could apply for a Merchant Cash Advance. This solution enables you to gain an advance based on your predicted future credit and debit card sales for an upcoming month, using 3 or more of your business’ latest consecutive card sales reports. Plus, Merchant Cash Advance also features flexible monthly repayments which work by the lender automatically deducting an agreed percentage from each of your future card sales until the agreement has been repaid. This means that amount you’ll need to pay each month can vary depending on the number of card transactions that have been performed, without affecting your cash-based revenue.

Overdraft Replacement

Another finance solution popular among small businesses is Overdraft Replacement. This operates similar to a credit card, enabling it to serve as a buffer for your business. This solution gives you access to a Line-of-Credit (LOC) which provides your business with an allowance based upon your past income. Although you’re not obliged to draw down any of the funds that are made available, you will be charged interest on anything that you do use. But should you withdraw more than the allowance permits, you’ll be subject to an overdraft penalty. In addition, once you’ve repaid what you’ve drawn, usually within 30 - 90 days depending on the agreement, you can instantly withdraw funds from the allowance yet again for anything that your business requires, including tax demands, staff wages, existing project funding and inventory replenishment - everything from restructuring your farm to giving your retail business a cash flow buffer. 

Could your business debts be put to better use?

For any business to succeed you need to have a bold vision and an effective plan to see it to fruition. However, you also need to ensure that your infrastructure is solid enough to scale and build upon. Growing before you’re ready will put pressure on your working capital and lead to your business running out of money. Fortunately, there is a solution. If you need to balance your finances whilst ensuring a steady rate of growth, applying for Working Capital Finance could be the answer. That why we’re offering you a helping hand. So whether your goal is diversifying your farm business, growing your exporting  

At Rangewell, we’re an Access to Finance specialist who has mapped over 400 lenders to offer you an overview of more than 23,000 business finance products. Our services are free to use and we’ll also guide through the application process. We’re with you every step of the way. So if you’re looking to grow your business and whilst reinforcing your finances, apply for Working Capital Finance today or find out more with Rangewell.


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