The answer we always give is that there is no one place that is the easiest, in most cases the actual need for finance is best addressed from multiple sources.
What Does This Mean?
If you were a business that wanted to expand and needed new equipment and a partial refurbishment of your premises then we would look at a few solutions.
- The equipment could be asset financed, leased or bought on a finance lease
- The refurbishment could be done on peer to peer lending
- Any residual cash flow finance needed could be done via your bank, or through merchant finance
So, the answer in this case would be to use the easiest form of finance for each element of the overall project.
Another reason why we like to see businesses spread their borrowing is that having multiple relationships makes getting future finance easier. Everyone prefers to lend money to someone they trust, so the more options you have the better. Makes sense eh?
The other reason is about risk. One lender being asked to take all the risk may result in them saying no as they see the potential risk as too much. Also, if you have other lenders willing to work with you then that gives the other lenders more confidence in you.
Again, it all makes sense.
Does Easiest Mean Best?
The easiest finance is not always the best, true. The flip side to this is what ‘best’ means to you. Sometimes it is best to take the easiest finance as the cost to delaying whatever it is can be too great for your business.
Remember, that unlike a dog. Your business finance can be for Christmas and not for life. You can move finance later on when there are more options open to you.
If you have any comments then please add them above, or contact us via the website and we will always respond.
By Lime Consultancy