Commercial Finance
In the current economic conditions, sourcing any type of business finance can be difficult. Whether you are trying to raise funds to purchase a property or a new chiller, it will have become a lot harder to do so over the last twelve months.
So what can be done to maximize the chances of any application being successful?
Whatever type of finance you require, it is a good idea to use an experienced independent commercial finance broker. The key word being independent. This means they will not be tied to one bank or lender and will be able to access a wide variety of different types of lending. They should hopefully be able to match your finance requirements and individual circumstances.
Despite what you see on the news and read in the papers there are lenders around prepared to lend, so ask your broker to shop around.
Government Help
The Government has launched a package of financial measures that will help viable businesses with temporary cashflow difficulties. These supplement existing Government help already available.
Government Guaranteed Lending
The government has launched a package of financial measures that will help enable banks to continue or resume lending to viable businesses with temporary cashflow difficulties.
Be prepared to research all possible options, and to negotiate with the lender, to get the best deal for your business. Since these are commercial products, participating lenders will determine individual borrowing eligibility.
Enterprise Finance Guarantee
Government guaranteed lending through the new Enterprise Finance Guarantee (EFG) is open to businesses with an annual turnover of up to £25million who are currently not easily able to access the finance they need. This will enable businesses to secure loans of between £1,000 and £1million. Note: all lending decisions will be at the discretion of the bank supplying the loan.
Find out more information about the new Enterprise Finance Guarantee.
Working Capital Scheme
Working Capital Scheme (WCS) - government is also making available to banks guarantees of up to £10 billion, which will support bank lending of up to £20 billion. The purpose of this facility is to release capital which banks can redeploy in order to increase all types of lending above their current plans to businesses with a turnover of less than £500m.
Equity finance: capital investment
Equity funding is a way of raising share capital from external investors in return for handing over a share of the business. This may take many forms, including a share of future profits. The two main providers of equity finance for private investors are venture capitalists - also known as private equity firms - and business angels.
The £75 million Capital for Enterprise fund (CFE) with £50 million of Government funding will allow companies to fund business development by selling debt in exchange for an equity stake in their business. The fund will provide equity and quasi-equity of between £250,000 and £2million for companies with turnover of up to 50 million euros, who have viable business models and growth potential in need of long term capital.
Businesses who would like to explore whether the fund might benefit them should call the Capital for Enterprise Fund Helpline on Tel 0845 4533780.