Funding the way to better business growth8th February 2017
As any business owner will tell you, ensuring your business growth and fluidity is vital for long-term success. There are many ways your business can develop and expand in order to attract a larger customer demographic. Likewise, there is an abundance of finance products designed to support and sustain your growth, and in various different ways.
But before you get the idea of using your own capital, think again! Although it may seem like a good idea, you must toss the notion into the dustbin of history in order to protect your sustainability.
Businesses that use their own funds during such an early stage in their development can face serious challenges later on. You are depriving yourself of key funds necessary for getting projects off the ground. Plus, many lenders prefer to deal with businesses where the owner can set aside capital for a rainy day, ensuring that they can still pay during challenging periods. Not doing so means there’s a heightened risk to the lender, causing future finance products to become much more tricky and expensive to acquire.
However there are plenty of areas where you can stimulate growth in your business, you just need to know how.
Funding your growth
Growth is without a doubt one of most enjoyable parts of running a business. With a touch of imagination and access to ample amounts of funding, there really is no limit to what you can achieve. Some of the most common areas where you may choose to stimulate growth may include acquiring equipment, building extensions, refurbishments, opening new branches and so on.
But whatever you decide, you need to pick a finance method that works and caters towards your business’s needs. An incredibly useful package that many business owners choose when seeking to expand and push beyond their current limits, is growth finance. Offering an array of finance products, including business loans, leasing and hire purchase solutions, it’s everything you need to succeed and flourish.
- Business Loans: When choosing a loan for your business you need to consider how much you need to borrow and for how long for. Applicable in a wide range of areas, including purchasing equipment, refurbishments, extensions, tech systems and so on, your business could borrowing anything from £5,000 up to £1,000,000 to support your goals. Loans typically come as either secured or unsecured. With secured products, lenders can secure assets should your business become unable to make the repayments, whereas with unsecured products they can’t. They also come with varying terms or monthly repayment schemes. Short-term loans tend to last from 1 – 3 years whilst long-terms loans can go from 3 – 6 years and possibly longer. When choosing the term length, you need to understand that longer terms can mean smaller monthly payments, but you’ll also be paying more interest in the long run. As such, it’s best to maintain a balance and keep monthly payments in a region that you can afford in order to gain the best possible value.
- Leasing: An option that allows businesses to borrow assets. Rather than claiming ownership, instead, you’ll borrow the equipment you need for an agreed period of time. During this time you’ll be required to make affordable monthly payments, plus interest. For many business owners, this is an ideal method because maintenance and repair costs are still the provider’s responsibility and you can present a potential buyer should you choose to keep the asset once the term is concluded.
- Hire Purchase: If you’re a business owner seeking to own equipment or machinery, but lack the necessary funds for an outright payment, hire purchase can help. Popular amongst factories, depots, storage centres, wholesalers, construction firms and much more, hire purchase allows you to make use of an asset and eventually claim full ownership. But before you receive the asset and are able to make full use of it, you will need to pay an initial deposit pertaining to 10% of the asset’s total worth. From here on, you’ll then commence with repaying the remaining sum through monthly payments. Once you have made payment in full, plus interest, ownership of the asset passes on to you.
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At Rangewell, we support a wide range of SME businesses of every shape and size, for finding every type of finance. Follow us on Twitter and LinkedIn for business tips and tricks, and feel free to call us on 0203 637 2340 if you’d like to chat about what we can do for you.
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