
What kinds of finance are best for SMEs with ambitious long-term plans? Both invoice finance and wider asset-based lending options are great for supporting long-term growth, dependent on the needs of a business. Invoice finance is structured to provide funding based on a percentage of a business? debtor book. As such, the more a business grows, the larger their sales ledger becomes and in turn, the invoice finance facility grows too. Alternatively, a business may also look at growth through M&A activity. Funding these sorts of transactions is highly suited to asset-based lending, which can provide finance against the assets within both organisations. This type of finance will also provide working capital for the new business once the deal has completed. What sort of things are businesses looking for finance for? In most cases, business look to third party finance to improve cash flow, with the aim of funding growth. However, asset-based lending can be used for a variety of scenarios, from helping a business to make an acquisition to support fir an MBO to funding a turnaround from a difficult trading period. What tips can you give to businesses pitching for finance? The main tip I would give is for a business to be realistic in its business plan and ensure that any potential risks are addressed. After that, I would say that carefully explaining how your business operates will allow the financier to provide a facility that really meets your needs going forward. What help and advice is available to small businesses in need of finance and don?t know where to seek it? Business owners will normally benefit from the support of a professional advisor who understands their sector, has a broad financial knowledge and has a wide network of mainstream and alternative financiers. Whilst there is a wealth of information on the internet, there are many organisations out there providing professional, independent advice to assist businesses in achieving both their short- and long-term plans.
This article is part of a wider campaign called the Scale-up Hub, a section of Real Business that provides essential advice and inspiration on taking your business to the next level. It?s produced in association with webexpenses and webonboarding, a fast-growing global organisation that provides cloud-based software services that automate expenses management and streamline the employee onboarding process.
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