Overdrafts are good ways to fund your cash flow. To establish your business or perhaps buy machinery and equipment, you may require long-term finance. There are several options available and to consider.
Credit cards
People starting businesses always seem to have the most skilled at moving debt around their credit cards, taking advantage of interest-free introductory offers. It is probably not the best way to find cash but is the quickest.
Bank loan
This is always secured against your personal or business assets and with planned repayments terms and amount. This is better choice compared to an overdraft because a loan cannot be called in unless you default on the repayments. However, you must also have healthy company accounts to show the bankers.
Old policies
Check out those long term insurance policies you fund. You might be able to borrow against them at a low interest rate. Ask your insurance broker.
Mortgage
Release some equity from the family home. It is cheap, but may be unsettling for those you love and live with. Be sure to pay it back!
Small Firms Loan Guarantee scheme
If you have not got the assets to secure a bank loan sometimes you can get one of these. The loan is underwritten by the Government who give the bank 85% of the cash if your business fails.
Sell and lease back
You can usually sell and lease back business assets such as machinery and vehicles. 'This will free up hard cash to fund business growth.
Factoring
By putting your debtors with a factor, who pays you straight away after a fee and interest and then collects your debts, you gain around one month's turnover.
Public sector
Councils and the many other public sector organizations that exist to drive economic regeneration and growth often offer loan schemes. Check them out.
Make sure
Before burdening your business with debt make sure that it really is necessary. Work out how you would get there without the loan. Is this a better route?
Concise Accountancy –Resources on financing options for business
