Raising finance to fund business growth
Transcript of Raising finance to fund business growth
Raising finance to fund business growth
Dan RobertsHead of Debt ProductsBarclays Commercial Bank
Types of finance available for small business growth
Where to source your finance
How to choose the right finance option for your business
Steps to undertake when sourcing finance
Types of finance available for small business growth
Where to source your finance
How to choose the right finance option for your business
Steps to undertake when sourcing finance
Types of finance available for growth
- Personal savings and assets- Grants & awards- Bank overdrafts- Bank loans & commercial mortgages- Credit cards – personal or business- Sales ledger finance (factoring & invoice
discounting)- Leasing- Business Angels
Using personal finance
All businesses will have an element of personal wealth invested in them. Often this happens a start-up stage
Most business owners have used personal finance at some point to fund their business
“At the start I needed the funds but I couldn’t get a loan because I
had no credit history”
“It was easier and less complicated than taking out a
loan ”
“The bank turned me
down for a loan last year, so I used personal funds instead”
Using grants and awards
Grants are usually project specific
Awards …Check out what your Local
Enterprise Agency can offer
Using overdraftsThe majority of respondents said that they would primarily consider an overdraft facility
for cash flow purposes
Other reasons included:
‘As a back up if a bit low on funds one month’
‘Only if really desperate as its so expensive’
‘Short term investment’
‘To buy materials’
Several respondents said
that they wouldn’t consider an
overdraft
“I wouldn’t use it for psychological
reasons. You would always feel that you
were paying off debt”
Using bank loansSecured or unsecuredThe majority of respondents would consider a bank loan for the purchase or rental of bigger business premises to expand the business
“Yes, I have one, which has helped me expand”
“To buy our specialist vans and vehicles”
The other significant consideration for a business loan was the purchase of equipment to help with the business, including vehicles
Using credit cards – personal or business
Using sales ledger finance
Insert QT Care case study
Using leasing
Insert Mavericks case studyBrimur case study
Using business angels/ equity
Types of finance available for growth
- Personal savings and assets- Grants & awards- Bank overdrafts- Bank loans & commercial mortgages- Credit cards – personal or business- Sales ledger finance (factoring & invoice
discounting)- Leasing- Business Angels
Most businesses use a mix of finance
Insert Flowflex case study
Types of finance available for small business growth
Where to source your finance
How to choose the right finance option for your business
Steps to undertake when sourcing finance
Growth Plans: Main Sources of Finance% of respondents planning to grow
Source: Business Change Survey
Retained earnings
Main bank: loan
Main bank: overdraft
Other bank: loan
Commercial mortgage
Government grant
Leasing
Factoring
Equity: personal
0 10 20 30 40 50
Types of finance available for small business growth
Where to source your finance
How to choose the right finance option for your business
Steps to undertake when sourcing finance
So you need finance, do you?
What do you want finance for?• Buying an asset• Improving cash flow/ working capital• Funding growth
a) UKb) Overseas
How much do you need?• Have you budgeted for all costs & contingencies
When will you be able to repay it?Other considerations
• Pension planning (SIPPs and SSASs)• Tax planning
Each of you will have different needs
Get expert advice
Use online tools such as Barclays’ Borrowing Solutions Finder
http://www.barclays.co.uk/lending/home_step1.html
Premise Use: Plans, advice/ support% of respondents planning 'significant' change
Source: Business Change Survey
Main bank
Accountant
Business support body
Solicitor
Other bank
Estate agent
0 5 10 15 20 25 30
Find out if you qualify for any grants
Use online tools like Business Link in particular to find out about grants
http://www.businesslink.gov.uk
What factors influence whether you decide to take a loan?
Affordability is the primary reason
Closely followed by flexible repayment terms 1
1
2
2
3
3
9
11
0 1 2 3 4 5 6 7 8 9 10 11 12 13
Excellent customer service
A personal banker
Fixed rates
An understanding lender
My circumstances
Nothing
Flexible repayment options
Affordable interest rates
Influential factors
Lending products considered vs. used
Loans and overdrafts remain the most popular products
Nearly half those who considered a business loan did not actually take one
2
2
3
4
4
8
14
2
0
4
2
4
6
8
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14
My own money
Grant
None
Personal Loan
Credit card
Overdraft
Bank Loan
Products usedProducts considered
Types of finance available for small business growth
Where to source your finance
How to choose the right finance option for your business
Steps to undertake when sourcing finance
Top tips
Get expert advice at every stage of the process
Check your business plan
Try and put yourself in the shoes of your potential investors and lenders: what will they want to see? What are their expectations?
If you need to raise 3rd party funds, what is your “skin in the game”?
Minimise your financing requirements by making your existing cash work harder, eg keep on top of your accounts receivable.
Some common pitfalls
planning
What are your goals & ambitions? Are these supported by a realistic written business plan?
Have you worked out what is the necessary cash flow for your business? How much funding you need? How much do you already have?
What are you going to do with the money? How will it help your business grow?
If you are purchasing an asset, have you taken into account all the upfront and ongoing costs to see how much you need to buy your business premises.
Think about the future.
Online resources e.g. Clearlybusiness
• Tools and services
• Advice and guidance to help you succeed.
• Whether you are just starting out or you are looking to grow your established business
http://www.clearlybusiness.com
Types of finance available for small business growth
Where to source your finance
How to choose the right finance option for your business
Steps to undertake when sourcing finance
Questions?