Setting up a small business, keeping one running, or even trying to expand one, is no easy task. That’s why many SMEs in the UK will look for funding options to help. However, sometimes this can be difficult, and many businesses will seek out financial products, only to find that they simply cannot access them, leaving them feeling like there’s no way forward. However, this in truth is rarely the case. In this article, we’re going to look at the two things any business owner or finance managers should do if they feel they cannot access the funding that they need.
Ensure you've exhausted all your options
There are so many products on the market these days that it’s highly unlikely that you’ve exhausted all of the options before deciding that funding isn’t available. As of 2016, major lenders in the UK have to recommend other alternatives to small businesses if they turn them down, which has led to a large number of options.
1. Comparison services
Comparison services are one of the best ways of getting a view of the whole market. Just because you’ve tried one or two of the bigger banks does not mean that all avenues are closed to you. Make sure you’ve got a view of all of the loans that you could apply for, provided they’re right for you and consider which you might be eligible for.
2. Other financial products
You also need to think about financial products that you might not have considered. Loans and overdrafts are the first products that most SMEs will turn to when they need funds, but these are not always the only options, and in many cases, they might not be the most appropriate either. If cash flow is a major issue, then it may be the case that overdrafts aren’t what’s needed, but that invoice finance is a potential solution. This is where a lender pays part of the value of invoices up front, before they’re settled by the customer. Alternatively, if you’re looking to fund an expansion, then angel investors or even crowdsourcing funds could be a potential option.
Whatever your situation, you must ensure you’ve pursued all options before resigning yourself to defeat.
Alter your business strategy
This is the more drastic option, but if you feel as though you have thoroughly searched the market and there simply isn’t anything appropriate available to you, then you may need to consider changing your business strategy in some way. This could potentially mean many different things.
1. Reduce your outgoings
If you’re seeking a loan to help fund through a period where cash flow is a problem, then it may be time to see how you can reduce your outgoings. This is a tricky task, because reducing outgoings can often have a knock-on effect that also reduces income, but it may be the best way of getting by without outside funding. Consider all of your outgoings, and see where they can be trimmed to improve the cash available to you.
2. Review your proposal
It may also be the case that you need to change your business strategy in order to secure funding, if you’re going to lenders with a particular proposal in mind. Many SMEs will seek loans when they’ve seen an opportunity, but not everyone may see things as you do. Consider whether additional funding is truly necessary, and if you still think that it is, consider ways in which you might be able to improve the plan you pitch to lenders. If the plan isn’t thorough, then lenders are less likely to see it as a wise investment on their part.