22 Jan Business Loans and Alternative Financing

Small businesses and businesses under five years old struggle the most when it comes to sourcing affordable funding. Even medium-sized enterprises experience cashflow bottlenecks. There are different types of business loans and finding the right one for your business will involve some research.

Better still, by turning to a broker you are more likely to find one quicker. Brokers have an intricate understanding of who lends money to whom and on what terms. For the average borrower, approaching lenders directly can be a real hit and miss scenario. Especially if they’re new at it.

Reasons for funding come in a variety of shapes and sizes, much in the same way that individuals have diverse reasons. Vehicle financing, relief for their cash flow, or to increase productivity. Some business loans will be to fund the all-important research and development. The saying that you must spend money to make money is not lost on the entrepreneur.

Business Loans for Startups

Businesses come in different shapes and sizes. The variety of products and services available in the commercial world go as far as the imagination can stretch. With this variety there is a lender to provide for every need.

The startup loans company is a good example of a lender filling a niche. Most new businesses and startups struggle to obtain business loans because of the lack of trading history. A real chicken and egg situation for those that need the funding to trade purposefully.

Security

Unsecured loans are really very difficult to find, even for those that have been trading for several years. Most loans will be secured in one way or other. Asset finance is a favourite way for lenders to provide financial assistance to young businesses. Loans are otherwise secured either on property or by a guarantor.

Asset Finance

When considering assets, a lender will not only consider machinery and fixed property as security, but may also look at existing orders that have come in. A business that needs additional machinery in order to fulfil those orders will negotiate a deal with the lender. The lender will then secure the loan against the orders and the machinery that has been financed. On occasion, lenders will lease the machinery to the borrower and set a different loan structure to make it more viable for the borrower.

High street banks and conventional lenders are particularly shy of new businesses and startups that have not started trading. Businesses that have been established for more than two years struggle to convince bankers to lend them money. Less conventional lenders and private financiers provide better options and will consider business loans with terms that match the risk.

Find a Good Broker

Brokers know the market well enough to know where not to waste the client’s time. A startup could be seeking out finance for anything from £500 to £5 million. Where they turn to for that business loan will depend on the industry, the business plan, the viability, any assets that they already have, the experience of the core leadership of the business, and more. Lenders have different criteria, especially private finance lenders.

High Net Worth Individuals

High net worth individuals sometimes need loans to participate in a new business venture. Usually, this is because they have their capital locked up elsewhere. Even those with a lot of money will sometimes need to lend money. In fact, it may be more prudent for them to borrow money than to liquidate any of their higher performing investments.

Businessmen and women are usually good at their trade. They need someone that is specialised in business loans and finance to help them fund their business and move forward. Instructing an experienced business loans and finance broker means that the business leadership can get on with running the business while the broker finds them the funding.

For a confidential discussion about your business funding needs, contact the experts at Belgravia Property Finance.