Unearthing fervent financiers keen to back your firm can be like findinga needle in a haystack.
When the chips are down and you need a monetary boost, or you want to get a new venture off the ground, it pays to keep your funding options open.
Long gone are the days when a business ownercould confidently walk into a bank, give the manager a knowing look and stroll out with a cheque in his top pocketand a pretty cashier on hisarm.
Nowadays, the only way a financially challenged proprietor walks out of a bank with a fistful of cash and an attractive teller in tow is if he’s entered with a shotgun, a mask and a list of demands.
We kid, of course.
Nonetheless, since the (whisper it) financial meltdown of 2008, banks have become decidedly more cagey with their currency – which can spell trouble for a firm in need of a cash injection.
Recent reports from the Bank of England hardly brighten the picture, with net lending through the Funding for Lending (FLS) scheme to small and medium sized businesses (SME) falling by £723m.
Although this may indicate some firms are keener to pay back rather than accumulate debt, the British Chambers of Commerce (BCC) reports many businesses find banks will not lend to them.
So, with that in mind, what are some alternative finance routes for your business?
Invoice Discounting
Opting for the invoice discounting route allows your business to borrow money secured against sales, with the lender delivering a percentage of your firm’s sales ledger and using the unpaid invoices as a guarantee for the borrowing.
Angel Investors
In return of a share in your company, an angel will invest their own cash and furnish you with their business acumen and contacts. Despite more than half of angels losing their investment, those who do it often find the experience “rewarding” and “enjoyable”.
Crowdfunding
Used as a way of raising finance through the web, crowdfunding works by asking many people each for a small amount of cash. In a recent report, the Crowdfunding Centre has claimed a new project is created somewhere in the world every three minutes.
Venture Capital
Often reserved for fledgling firms with a potential for growth, venture capital financing is a popular option for financiers due to the above average return on investment. However, some new business owners may feel uncomfortable relinquishing total control of the company in return for cash.
