ACCOUNTANTS & BUSINESS ADVISERS
Changing Lives Through Exceptional Business Advice
Raise Finance for
your Business
Discover unconventional ways of how you could raise
finance for your business.
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Many traditional business owners fail to realise the alternative
ways of raising the necessary finance for their company. Banks
are not the only option. Many of them believe it’s the battle of
the fittest with high street banks, believing they have to meet
the criteria of having good credit, history and enough evidence
to prove repayments. Nevertheless, most are left dishearten,
disappointed and left empty handed.
But did you know there are so many other non-banking ways
to raising finance?
Well, we don’t blame you. See most business financing
advertisements are dominated by the high-street banks, but
let’s stop with the possible excuses and let us explain to you the
15 unconventional ways to raise finance for your business.
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Customers and Suppliers
Why would you lend your money to others for free?
9 out of 10 businesses look to raise external finance when their
cash flow gets tighter. But we believe there are some quick
wins internally.
✓ Pro-active systemised way to chase debtors and collect money can significantly
improve your cash flow. This is your money, why would you lend interest-free?
✓ Offer incentive to pay invoices within 7 days. For example, early settlement
discount. We believe almost 10% of the customers choose to pay early and avail
the discount.
✓ As
a business policy, charge interest on overdue invoices. Make sure you
communicate the policy on the copy of the invoice so all your customers are
aware of it. Do you know at the moment, you can legally charge 8% p.a. above
the base rate on all overdue amount?
✓ Negotiate
terms with your suppliers to match your customers so business
working capital requirements are low. If you offer 30 days’ net to your
customers, try to negotiate the same with your suppliers.
✓ Analyse your buying volume for each supplier and negotiate better terms and
discounts. Use your buying power.
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Grants
We call it ‘free money’
Grants are non-payable funds that are awarded to
businesses for the purpose they have stated when
applying for it. It’s estimated that UK and EU funded
programmes have put aside £200 billion to help small
and medium business. For further information please
visit https://www.gov.uk/business-finance-support
Start-up Loan
Get up to 25k!
Start-up loan is a Government backed scheme (and a
personal loan) that helps individuals who are in the
early developing stages of their business. Eligible
businesses can borrow between £500 to £25,000 per
Director. Process is fairly straight forward, quick and a
lot of help is available.
For further information please visit
https://www.startuploans.co.uk/
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Bank Overdrafts
People from all economic brackets experience
overdrafts from time-to-time
Bank overdrafts (OD) are flexible from of finance that is
offered by the banks. Although this may not directly result in
cash inflow, they allow businesses to cover temporary shortage
of cash when necessary. Businesses are required to pay
interest on the amount of the overdraft used and therefore if
business need long term funding then you should avoid using
OD.
EFG Loan
Since EFG was launched in 2009 more than £2bn
worth of additional lending has been approved
The Enterprise Finance Guarantee (EFG) scheme lends businesses
who are unable to receive finance from their lender due to not
meeting the lender’s security requirements.
Essentially, it’s a Government guarantee to a lenders i.e. high
street banks to cover 75% of the loan amount should business fails
to repay. However, application process is exactly the same as you
would expect in any other loan application. All major high street
banks provide EFG facility.
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EIS/ SEIS
Private investors have poured more than £8.6
billion in to nearly 20,000 companies since the start
of the EIS/SEIS Scheme
The Enterprise Investment Scheme (EIS) and Seed Enterprise
Investment Scheme (SEIS) are Government initiatives that offer tax
reliefs to investors who wish to invest in eligible businesses that are
considered highly risky.
This doesn’t result in immediate cash inflow but it’s a fantastic way to
EIS:https://www.gov.uk/government/publications/the-enterprise-investment-schemeintroduction/enterprise-investment-scheme
SEIS: https://www.gov.uk/guidance/seed-enterprise-investment-scheme-background
Invoice Financing
Companies using Invoice Finance report a
12% increase in sales!
Invoice financing allow companies to raise quick finance
against their accounts receivable. You can draw approved
funds against your eligible sales invoice as soon as its raised
and sent to your customer.
Over the years due to intense competition from nonbanking lenders, the cost associated with invoice financing
setup and on-going has reduced significantly and we
believe this is now a great way to ease the cash flow.
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Purchase Order Financing
Are you turning away your customers because of
lack of finance to produce?
We know this is not common and there are not a lot of lenders
offering the service. However, in our experience this is an excellent
way for fast growing businesses to fund their working capital
requirements. Usually this facility is setup in conjunction with
invoice financing.
As soon as order is confirmed by an eligible customer, approved
funds can be drawn immediately. Once the goods are delivered
and sales invoice is raised, funds are raised using invoice financing
facility to pay back purchase order lender.
Personal Credit Cards
Easier option however caution is
required
Using personal credit cards to finance your business is
certainly not our favourite option. It’s expensive!
However personal credit cards can be an option.
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Family and Friends
38% of startup businesses relied on money from
family and friends
Raising money from family and friends can be a great and easy way to
start your business, since banks do not lend money without track
records or reliable repayment plan. However, it can also put a strain
on your relationships and therefore not always easy.
When considering this option, it is crucial to follow professional
standards. This means putting the loan agreement in writing with
exact terms of repayment, expected returns, debt or equity and
respective rights and duties of both parties.
Crowdfunding
The global crowdfunding industry was estimated
to be £34 Billion in 2015 and more than £1,700 is
raised every hour in the UK
Crowdfunding is like an expansion of the charity sponsorship page in
the business world. However, people here pool money towards a
venture or an idea that needs funding to develop or expand. For
instance, if business requires £100k, twenty people could invest £5k
each to provide the necessary funding to the business.
Investors are usually private individuals who provide small sums and
are therefore less rigorous compared to an angel investor.
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P2P Lending
In 2015, approx. 20,000 SMEs raised £2.2 billion
with alternative financing
P2P Lending or Peer 2 Peer Lending is quite similar to
Crowdfunding where private individuals can pool funds to provide
the necessary funding to the business. P2P lending is mostly an
interest bearing un-secured debt.
During the recent years, there has been a surge in P2P lending
platforms and we believe this is surely a worth considering option.
HNWI or Private Investor
Global HNWI wealth forecast to top £56.4
trillion by 2017
High Net Worth Individuals (HNWI) are also an option however
we do appreciate it’s not so easy to attract and convince them.
We believe this option is particularly interesting if the individual is
industry expert and can accept an advisory role on the board.
These individuals are well-connected and have years of priceless
experience to share.
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PE and VC Funding
You must take professional advice before accepting
any offers. You need to make sure you get the right
valuation of your business and be comfortable with
their management team and working style.
Private Equity (PE) and Venture Capital (VC) are sometimes confused
with each other as they both refer to firms who invest in companies,
exponentially grow usually by injecting debt financing and exit by selling
the investment in equity financing such as Initial Public Offerings (IPO).
This form of fund raising is not ideal for every business and you do need
some pre-requisites in order to attract any PE/VC firm.
Capital Markets
Now you must be thinking this is not for me? I’m too small and
so on. Let us explain….
If your annual turnover is minimum £1m, moderate profits and no to moderate debt,
you may be eligible for an IPO. There are lots of stock exchanges across the globe for
SME businesses for example NEX in the UK. This option is worth considering if:
➢ You can exponentially grow your business 5 to 10 times with the surplus cash
➢ Looking to raise equity finance (minimum £500k per year)
➢ Comfortable giving away part of your equity
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Lastly but most importantly, before you reach out to
any lender there are some ‘must-have’ pre-requisites.
You must have;
➢ At least 12 months of most recent statutory
accounts (ideally 2 years)
➢ Up to date comprehensive monthly management
accounts
➢ Decent business plan
➢ At least 24 months of cash flow and profit
projections
1. Personal asset and liability statement
2. At least 3 months business bank account statements
At SAW, we helped many business owners like you to raise
finance through these unconventional methods. We have raised
more than 4.8 million in funds so far and helped our clients
achieve exponential growth!
So, let us help You and Your business today to raise more
finance, profitably grow your business and let you live the life of
your dreams!
Our SAW representatives will be happy to arrange a FREE
complimentary consultation with a Director, who will drive your
business forward.
CHANGING LIVES THROUGH EXCEPTIONAL ADVICEPhone: 020 7183 6362
Email: [email protected]
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References
1. HNWI Investments: Strong Opportunity for Wealth Managers to Gain More HNWI Assets https://www.worldwealthreport.com/HNWI-Investments
2. High Net Worth Trends in the UK 2016-2020 - Research and Markets | Business Wire http://www.businesswire.com/news/home/20161019005777/en/High-Net-Worth-TrendsUK-2016-2020-3. P2P lending: Promising signs for 2017 | Lending Works https://www.lendingworks.co.uk/blog-post/p2p-lending-promising-signs-2017
4. The Global Crowdfunding Industry Raised $34.4 Billion In 2015, And Could Surpass VC In
2016 – Daze info - https://dazeinfo.com/2016/01/12/crowdfunding-industry-34-4-billionsurpass-vc-2016/
5. 10 Fun Facts About Crowdfunding - https://www.entrepreneur.com/article/230252
6. 15 facts you never knew about credit cards | This is Money http://www.thisismoney.co.uk/money/cardsloans/article-3664124/15-facts-never-knewcredit-cards.html
7. 20 Amazing Facts About Credit Cards You Didn't Know (Yet) https://www.supermoney.com/2014/04/credit-card-facts/
8. How Does a Purchase Order Work? | Chron.com - http://smallbusiness.chron.com/purchaseorder-work-40933.html
9. Five facts on invoice finance | Inside Small Business https://insidesmallbusiness.com.au/finance/five-facts-invoice-finance
10. Compare invoice finance from over 30 leading lenders https://www.businesscomparison.com/invoice-finance
11. EIS Investment - Facts and Figures Revealed - seis.co.uk - http://www.seis.co.uk/eisinvestment-facts-and-figures-revealed
12. EFG-factsheet.pdf - http://www.nfbp.org.uk/wp-content/uploads/2013/08/EFGfactsheet.pdf
13. Quid Corner - What is an Overdraft - https://www.quickquid.co.uk/quidcorner/2017/02/24/what-is-an-overdraft/
14. Get the Facts About Overdrafts and Fees | Consumers Union http://consumersunion.org/research/get_the_facts_about_overdrafts_and_fees/
15. Facts & figures | Ofgem - https://www.ofgem.gov.uk/news-media/energy-market-factsfigures
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