Alternative Funding Options For Your Business

1. Alternative Funding Options For Your Business The funding options for businesses, particularly businesses which are in the early stages are limited at best. This issue has been compounded by the legacy of the credit crunch and the continued lack of liquidity in the wholesale funding markets. That said, there are a number of funding methods which have developed and increased in popularity as investors and individuals recognise the potential returns which can be derived from lending to businesses. Depending on the structures which are adopted there is potentially a return for a range of investor returns. In addition there are a range of additional and disruptive funding methods, such as crowd funding and single invoice financing which have been developed as part of this shift, and recognition of opportunity. Frankly banks are not lending at pre credit crunch levels. This landscape has been in place for 3 plus years, with lenders all squabbling over the prestige deals which have good liquidity and a strong balance sheet. However, as with any country after and in the midst of recession there are a huge number of new businesses which have been setup during this time, which have funding requirements like any other business, probably more so than any other business. So, we have set the scene. What are the options? As a business owner you will need to consider that you have a number of decisions that you will need to make Alternative Funding. First, you need to decide if you are prepared to give away some equity from your business. If not, then you will need to consider the different types of lending available. If your business is a start up then you will need to consider that you are probably going to have to provide a personal guarantee for any lending which you are considering. Unfortunately, due to the high failure rate of start up's this will be necessary, for loans and overdrafts. One method of funding which can be an effective method of increasing the cash available for a business to grow is invoice finance. This is a means of releasing cash flow from invoices which have been raised in advance of receiving payment for said invoices. In return a lender will use the invoice as a means of security, and may act as the credit control for the outstanding invoice. The important thing about a cash flow finance facility is the fact that as the business grows the funding facility can also grow. The application process for an invoice financing facility will normally be relatively straightforward, with an audit required for the existing debtor book. Matt Lenzie is founder of a number of websites including http://www.commercial-mortgages- broker.co.uk which is a finance brokerage with relationships with a wide range of different lenders. The

2. business was formed was formed in 2010 to provide impartial advice and opinion on the funding options available to businesses.