How to improve your chances of securing business funding
How to improve your chances of securing business funding. The number of small businesses looking for finance is on the rise. The latest SME Finance Monitor found the proportion of SMEs planning to apply for finance increased from 10 per cent in the first quarter to 14 per cent in the final three months of 2017.
To help your search for finance, the first step is to really understand how commercial lenders evaluate whether you and your business are a safe bet.
Your personal circumstances, track record, business plans, purpose of funding and relative affordability will all impact the availability of funding.
Take your track record, for example. Lenders will evaluate the previous results of an existing business. With a start-up, they will ask several additional questions.
These include: do you have any experience of the field you are entering? Can you point to a strong, relevant skill-set such as sales, management, or technology? Have you run businesses before?
Turning to the purpose of the funding, being clear what types of finance match your requirements will save you a great deal of time, and possibly money. Your bank can offer a wide variety of funding solutions.
But I would recommend that you compare the banks offerings with alternative business-funding aggregator sites.
A relatively new phenomenon (think ‘GoCompare’ or ‘meerkats’) these sites allow a business owner to enter their details and requirements quickly and safely to build a picture of your business and give you a snapshot of the funders who would be willing to lend to you.
In a few seconds you can whittle down a universe of over 100 lending products into the most appropriate four or five, and then establish contact with those funders if you so wish.
There are also many national or local government-backed initiatives to support SMEs. The most well-known of these is Start-up Loans, backed by the UK government.
It is aimed at small scale start-ups, with a maximum deal size of £25,000. Local government also has a range of activities in this space, often teaming up with Community Development Finance Initiatives.