Finance is the foundation of any business venture but it’s no secret that the trade has had to endure some tough times when it comes to lending over the last few years.
However finance firms say things are changing.
Rob Straathof, chief executive at alternative financing firm Liberis, said there has been a “revolution” in small business funding in recent years, resulting in “an enormous amount of choice for licensees”.
“It is easy to be overwhelmed by this, which is why it is first important to establish how much money your business may require before seeing what’s available,” said Straathof.
As a starting point, Liquid Finance, a firm which offers financing through business cash advances, suggested operators consider seeking out expert advice.
A spokeswoman for the firm said they should also be prepared to show evidence of their financial situation when making an application.
“Essentially, the operator should expect to be requested to show evidence of their business dealings,” she said.
Advanced preparation is key, Liquid Finance’s spokeswoman suggested, highlighting late applications as “one of the most common mistakes” operators make.
“This can cause more stress than necessary,” said the spokeswoman.
“Although Liquid being able to fund applicants within a ten to 15 day period following an application helps, waiting until the last minute is never wise.”
Stephen Fleming of SJF Scotland agreed that preparation is key to funding applications, adding that when it comes to traditional funding, operators should make use of existing relationships where possible.
“If you already have a banking relationship sound them out before hand – this can give an excellent insight as to what the bank will support and what it will not,” said Fleming.
“The first port of call should be your existing banking relationship which hopefully will be a positive feature.”
When approaching a bank, operators should be “as realistic as possible”, Fleming said, adding that banks respond well to applicants who can present contingencies.
“[Including] a couple of ‘what ifs’ shows the bank that you recognise different scenarios,” he said.
Paul Smith of Barclays agreed that contingency measures are important as “you must be able to demonstrate how the business would cope if things do not progress as planned”.
Smith said that providing a lender with the right information “is crucial” and applicants should gather as much as they can, including “a well thought out business plan that includes market research illustrating why the project is a good investment opportunity”.