This is the question that many SME’s are asking in ever increasing numbers. If the Banks will not lend to them who will? The answer is that there are many alternative sources of funding that many people are totally unaware of. There are even some products from main stream lenders that seem to be forgotten. Here are just a few examples, but remember these are ‘alternative’ sources and as such are more expensive than High Street lenders.
Single Invoice Discounting or Factoring: Many Managing Directors do not have the need for a full ledger, long term invoice discounting or factoring agreement from a main stream provider but from time to time they may have the need to use the services of a single or selective invoice discounter. They may need some extra funding to pay a VAT bill or corporation tax or to purchase stock for a big order. So if you are in that situation then the single invoice discounters are the answer. Use them only when you need them.
Enterprise Finance Guarantee Loans (EFG) These government backed loans are terribly difficult to get from a Bank, but they are not the only people that offer them. Some invoice discounters are also able to offer their clients this type of loan. They are much more enthusiastic about these loans than the Banks are. This is another reason why it is so important to take advice when choosing your invoice discounting or factoring provider. So many people chose the first one that approaches them without exploring what additional services some of them can offer such as EFG loans, Trade Finance and Stock Finance. Chose the wrong one and you may miss out further down the line.
Trade and Stock Finance: In the past if you required this type of funding they always had to come from your Bank or from an invoice discounter or factor. You had to take all services from the same provider. There are now Trade and Stock funders that only do Trade and Stock funding. You still have to use Invoice Discounting or Factoring but now you have a wide choice of providers that you can choose from.
Angel Funding: In the past Angels parted with their money for equity stakes in your company. Now there is an Angel Network that specialises in giving loans to companies so that you do not have to give up any of your hard earned equity.
Crowd Funding: A new Angel Network has emerged where small individual investors can take small stakes in your company. This is an interesting concept for those start-ups companies with mass appeal, who cannot get funding from normal angel networks.
Credit/Debit Card Finance: Do your customers pay you by credit or debit card? Do you need to raise some funding to buy a new piece of equipment or to re-furbish your restaurant or salon? If so you may be able to borrow money on the strength of your future credit/debit card transactions.
The banks are not the only sources of funding out there. Look around for these alternative sources and contact an experienced adviser.
Author: Peter Kelly