In the current economic climate, the raising of finance for your business can prove a major challenge.  As a consequence, businesses are looking for increasingly varied ways of raising funds.  Whatever route you as a business owner may decide to take, there are, a few basic rules to follow to maximise the opportunity of raising finance successfully.

1. Be prepared – Management information. Any finance application will require:

• copies of full financial statements for the past three years trading
• up to date monthly management accounts
• a cash flow forecast – the period of which varies but should be for a minimum of six months. Note this forecast should highlight peaks and troughs identifying when your business will require additional funding
• the impact of COVID-19 to the business and the changes instigated to your business to deal with the problem

Tip – accurate financial management information is the key to all finance raising.

2. Approach – the first port of call for finance raising should be your existing bankers who have knowledge and experience of your business. Providing them with the accurate financial information, as per point one above, makes it easier for them to assess and approve your application.  Banks are being inundated for requests for finance and so, the more complete your application, with supporting management information, the easier it will be for your existing bank to approve your application quickly.  If, your own bankers are not willing to lend to your business, they should explain their reasoning for this.  This knowledge may then be of use to you when approaching other (new) potential lenders.

3. Alternatives – other areas of finance for your business could be via existing customers or suppliers, for example, asking key customers for early payment of trade debts and deferring trade creditors into extended credit terms (subject of course to their prior agreement). If you are a commercial tenant, open discussion with your landlord to explore the possibility of renegotiated terms.

4. Explore New Sources of Finance – There are alternatives to traditional bank lending in the marketplace:

• Private equity – either debt or equity finance – they have funds to invest!
• Business angels
• Crowd funding
• Asset based lending

In summary, there are options available for viable businesses. The key to any finance application is to review the business and its financial needs and to have accurate management financial information to support your proposal.

For assistance in assessing your business financial needs or supporting you with the preparation of your management information please contact Barnes Roffe LLP today.