Different finance options avaliable

As an SME, What Finance Options Are Available to Me?

Posted: 6th November 2018

Fact: A mere 30% of SMEs are aware of alternative finance options.

Finding the right funding to enable cashflow and working capital can be not only be stressful but confusing too. Our aim is to help show you the many finance options available to SME businesses just like yours.

For example, don’t be fooled into thinking that finance can only come from your high street bank or lender. Whilst traditional lending is available it can be inflexible and impersonal. Therefore, alternative finance options are becoming hugely popular due to their flexibility, ease to set up and competitive rates. 

What Finance options are available to me?

Loans:
Traditional bank loans offer both a long and short term option, secured and unsecured, however are not flexible to meet your business needs, growth and changes.  

  • Advantage is that rates are set, meaning you know your outgoing commitment

  • Disadvantage is that the loan cannot be reduce or added to without applying for a separate loan

Overdrafts:
Attached to your business bank account, an overdraft is usually free to set up yet is usually for a limited and small amount.

  • Advantage an overdraft gives is you are only borrowing money as and when you need it

  • Disadvantage is that fees can be very high if you go over your overdraft and shouldn’t be viewed as a long term solution

Invoice Factoring:

A finance solution that pays you up to 90% of the value of each issued invoice within 24hrs, with the balance paid once the invoice is settled. Your facility grows with your business so there is no need to reapply. Quick to arrange, competitive and provides instant cashflow injections.

  • Advantage is that cashflow is guaranteed and the facility is fully inclusive of a credit control service. In addition, you receive a personalised service of which is adaptable to your sales turnover

  • Disadvantage is if you are charged additional fees for collection and unused lines for example – ensure your provider is upfront about all charges

At Calverton Finance we operate a completely open, honest and transparent working practice, with no hidden fees or charges. Our invoice factoring solutions range from: invoice finance, confidential invoice discounting, selective invoice finance and short term solutions.

Investment or Business Angels:
An individual who will provide capital to a business – usually a start-up – for an equity stake in the company.

  • Advantage is that said Angels are business savvy and can pass on advice and help

  • Disadvantage is that you will have to give away a percentage share (and profits) to the Angel

Peer to Peer Lending:
Growing in awareness and popularity, P2P lending matches a business straight to an organisation or individual who are looking to support UK businesses.

  • Advantage is that it can be very quick to arrange

  • Disadvantage is that can be very complicated when arranging directly.

Crowd Funding:
This funding has grown in popularity in recent years – it is whereby the public invest in your business, usually for a perk or service from your company rather than for a stake.

  • Advantage is the very nature of the funding automatically advertises your business

  • Disadvantage is that your new idea you’re trying to get off the ground could be copied or not enough funds are raised.

TOP TIP: Always conduct an annual review of your finances and providers, to ensure you are benefiting from the very best terms in line with any changes to your own circumstances.