Speak to any business owner or browse the business section of any newspaper and if you’re likely to come across stories of struggles to access sufficient finance to grow or maintain their business. But we are beginning to witness an alteration in how business owners access finance with many now looking for away alternative sources. fintech review criteria
A study carried out by the UK’s Forum of Personal Business found that 26% of businesses were hunting out alternative lending options, with 21% seeking them outside of the traditional main Traditional lenders. In fact, in another study undertaken by the Federation of Small Businesses, it was uncovered that only 35% of respondents used a traditional overdraft center in 2011.
So, if banks are continually hesitant to lend to all but the best risk businesses, how can the rest of the UK’s business human population finance growth? Below are a few of the increasingly popular substitute sources of finance to investigate.
Better Management of Working Capital
This could seem to be an peculiar source of finance but very often businesses are sitting on undiscovered cash reserves which is often used to finance growth. A record issued by Deloitte in 2011 revealed that the UK’s most significant businesses were sitting on? 60 million of unproductive working capital. Inefficiencies in how working capital (debtors, stock and creditors) is handled can unnecessarily tie up your money. Cash can be unlocked and released back again in to the system thereby allowing self-financed expansion plans by taking a detailed look at credit types of procedures, how credit conditions are awarded and just how outstanding payments are chased.
Ensuring that stock is kept at an optimum level via better inventory management is yet another area where cash can be released to support and finance expansion. Take a good look at your inventory management process and identify areas where cash is stuck.
Good management of working capital is not merely about better control of customers and stock, it is also about maximising the conditions given by lenders. Are you too excited to maintain a first class relationship with your suppliers by paying some time before the due date? You can positively impact your cash position through full good thing about conditions proposed by your suppliers. Have you totally leveraged your position by seeking an comprehensive of conditions from say 40 days to 45 times?
Being better in how working capital is handled can release sufficient money to self-finance growth ideas.
With traditional avenues of funding being more difficult to gain access to business owners are actually looking to their personal resources to fund growth. If it be using cash savings, using personal credit cards or taking additional mortgages on residential properties, such sources are an instant solution. A study by the Federation of Small Businesses found that 33% of respondents experienced utilised their savings to fund growth. As well as being more immediately accessible using personal resources is often a less costly source of finance.
Relatives and Friends
Sometimes known to as the 3 F’s – family, friends and fools – this can appear to be a less stressful way of raising finance. In some ways it can but it can even be a journey fraught with hazard. Tapping into their personal network business owners source finance by either seeking that loan and offering to pay an interest rate higher than that available on a High Streets savings account, or offering a slice of fairness in the business in return for investment.