If you buy a car then you do so because you need to get around, you need to be able to travel and remain mobile. The car you choose is probably based on the following;
- You like the car and have seen it advertised
- Always drive this brand
- The right size/type and it looks good
You may add in ‘fuel efficiency’ or was great on the ‘test drive’ but ultimately you were drawn to it by one of the factors above before considering the rest.
You probably didn’t buy the car because of the way the engine was laid out, the type of oil it uses, the brand of tyre, colour of dashboard lights etc.
Business funding options are fairly similar. Most businesses will borrow from the lender that they;
- Seen advertised
- Borrowed from before
- Appeared to be a great deal
What businesses rarely look at is what is going on beneath the bonnet. What the terms and likelihood of getting the finance are, how it all works and the finer details of things. It is rare for a small business to even know how long the finance will take to be approved, let alone how long it will take to complete and get the cash.
The good news is this is what we do. The benefit is that we know the new options that are available and can often prove to be great alternatives. These are the 3 new business finance options we have been using a lot of lately. Read on…
1 – Secured Loans
For businesses that simply need to borrow for a purpose. Business secured loans are less about the fine details of your business but more about the value of the security. Bearing in mind that all borrowing is within your business’s name then the costs are easier to account for in your P&L.
Secured loans look less at your accounts, credit history, bank statements etc. They can be a great option for many companies, they can also be agreed within 24 hours and drawn in a couple of weeks, so nice and quick also.
Previously most secured loan providers wanted detailed assessment checks and applying involved a prolonged approval process, this is no longer the case.
2 – Auction Finance
Property investors going to auctions are rarely aware that lenders will provide a loan approval based on lot number and auction date. The lender will look at the property before the auction and provide an agreed loan in advance.
Often the lender will pay their own legal fees, for their own valuation and document fees. This means the property investor can go to the auction, bid on their property and know that the finance is in place already.
3 – Unsecured Crowdfunding Loans
One of the biggest issues we see business face when approaching their bank for finance is the request for charges over property as security. For many business owners this can be OK, the common issue is when a company has more than one director and the directors have an uneven spread of property assets.
This means that the risk taken by one director is much higher than the other, that can cause some internal issues and breaks the evenness of owning a business together.
What a lot of businesses don’t realise is that they could borrow up to £200,000 without using their properties as security. This can mean that where providing property as security causes an issue then a solution exists.
More Business Loan Options?
The 3 options above are simply some of the popular funding options we have used recently, the right choice for each business depends on many factors and getting the right option is essential. It is well worth taking advice as the devil is always in the detail.
The point is that there are some great business loan options out there, they are just not always where they once were.
If you want more information on any of the above, or want to look at any other business funding issue then please get in touch on 01293 541333 or via the Lime Consultancy website.
By Dave Farmer