Lending is looking up

After years of difficulty, firms say it’s getting easier to secure finance

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Securing investment for a licensed trade business, whether for a new or existing venture, has presented challenges in recent years.
But with the economy picking up, finance experts insist there are now more ways than ever for new or established operators to obtain funding for their projects.
Adrian Foster, associate director of Christie Finance, acknowledged it had been “a difficult time” for those looking for funding, but claimed the market had picked up over the past 18 months.
“With the addition of ‘challenger’ banks to the market as well as an improvement in appetite from the ‘big five’, we have found that there are certainly a lot more options available for first time entrants to the sector and those operators looking to expand,” said Foster.
The best lending options will depend on the individual business, said firms, but certain advice was universal.
Bruce Walker, head of advisory debt with KPMG in Scotland, advised operators to “shop around” for the right lender.
And a clear business plan is essential.
“Before approaching lenders, they should formulate a business plan which clearly defines their strategy and how they intend to achieve their goals, including detail of their debt and working capital requirements,” said Walker.
This was reinforced by Russell Pinkerton of RBS, who said a business plan “will make a big difference to progressing a funding application”.
There are also some common mistakes to be avoided, said firms.
Rob Straathof, chief executive of Liberis, said: “A common mistake is to borrow more than you need.
“You’ll always have more ideas than cash, so separate what’s nice to have from what’s essential; never borrow more than you need.”
The timing of the loan is also an important consideration, according to Liquid Finance.
“One of the most common mistakes in Liquid Finance’s experience is clients who apply for funding rather late, almost at the point of needing funds,” said a spokeswoman for the firm.
“This can cause more stress than necessary.”