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10 reasons why businesses borrow money

28/04/2021

Many business owners see ‘debt’ as a scary word that should be avoided at all costs. However, the opposite can in fact be true.

Borrowing money for your business through the right facility can bring a number of benefits and improve your chances of commercial success.

Here are 10 things it can help you to achieve:

1. Stay ahead of competition

Despite current economic uncertainties, the number of SME’s is continuing to grow. And, with all the competition out there, it is essential that you continue to invest in growth and development. If you don’t have the funds available to keep up, then borrowing money can be the boost you need to stay ahead of the competition.

2. Keep up with the times

Having the latest plant, equipment and machinery can help improve processes, increase efficiency and take on more substantial orders. But, having the necessary working capital to make these purchases can be a challenge. By borrowing money your business will be able to gain access to the necessary funds to make large purchases that you might not be able to afford otherwise.

Read more about asset finance and how it can help businesses buy new assets.

3. Improve your credit rating

When you borrow money and make your credit payments on time you can significantly boost your business’s credit score. This then makes it easier to secure further credit in the future so that you can continue to be successful.

4. Boost working capital

Often, when a business trades on credit terms, cash flow can be stretched as suppliers need to be paid ahead of receiving payment from customers. And when a business is experiencing rapid growth, this can become even more of a problem, meaning that continual borrowing is needed to make sure that enough money is available at all times to meet day-to-day commitments.


By the way… If you’re in need of a cash flow boost, we can help. An award-winning commercial finance broker with more than 24 years’ experience, we can identify the most suitable funding facility to help your business overcome a wide range of cash flow challenges. Request a call back today to find out more.


5. Reinvest to bring in more money

Whilst borrowing does provide businesses with an added expense, often using the investment can generate more money than it costs to borrow. With improved access to working capital businesses can take advantage of new opportunities as and when they arise. This can lead to an increase in sales and profit.

6. Reduce personal risk

If you have personal savings, it may be tempting to invest them into your business to avoid finance fees. However it can be risky business tying up personal savings in your business, and it could come back to bite you further down the line. By borrowing the money instead you can keep your personal savings intact.

7. Take advantage of supplier discounts

Having access to working capital can put your business in a better position to take advantage of incentives like early settlement discounts. This can save your company money which can be better spent elsewhere.


Additional benefits

When most people think of borrowing, they think of traditional bank products such as loans and overdrafts. Yet developments in the commercial finance market mean there are a number of more specialist solutions, such as invoice finance, which provide growing businesses with even more benefits. For example:

8. Gain added flexibility

Whether you’re using the money to meet your day-to-day needs or to fund expansion, the amount of funding you can access through invoice finance grows in line with your sales ledger giving you greater flexibility. This is particularly good for seasonal or growing businesses who may need to adjust their funding to meet demand.

9. Bring in additional expertise

With invoice factoring, as well as boosting cash flow, a dedicated sales ledger management service is incorporated which can significantly reduce in-house overheads and improve your credit control performance. This means you will be able to focus your time and effort on other aspects of managing and improving your business rather than chasing payments from customers.

10. Provide extra security

Unfortunately, late payment poses a threat to even the most successful businesses – and even when you have a full order book you could still wait months for payment. This can seriously hamper your business growth and put strain on your working capital. However, with invoice factoring the lender can credit check potential customers, meaning you are likely to trade with customers that pay on time, protecting you from the threat of debtor insolvency.

As a commercial finance broker we can introduce the most suitable funding facility for your business’s needs. Contact us today on 0800 9774833 to discuss your requirements, or get an instant quote using the tool below:

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Some of the funders we work with

  • InvoCap
  • PNC Business Credit
  • Time Finance
  • Bibby Financial Services
  • Secure Trust Bank
  • Woodsford Tradebridge
  • Nucleus Commercial Finance
  • 4Syte
  • Merchant Money
  • Shawbrook Business Credit
  • Investec
  • Peak Cashflow
  • Skipton Business Finance
  • Boost Capital
  • Metro Bank SME Finance
  • Trade Finance Partners
  • Davenham Asset Finance
  • iwoca
  • Ultimate Finance Group
  • Clear Factor
  • inFund
  • ABN AMRO Commercial Finance
  • Partnership Invoice Finance
  • Royal Bank of Scotland
  • Close Brothers Invoice Finance
  • Optimum Finance
  • MaxCap
  • Haydock Finance Ltd
  • Accelerated Payments
  • Barclays
  • Aldermore Invoice Finance
  • Leumi ABL
  • Santander Corporate & Commercial
  • Davenham Trade Finance
  • Sonovate
  • Creative Capital
  • Asset Advantage
  • Roma Finance
  • FIBR Tech Limited
  • Pulse Cashflow Finance
  • MarketFinance
  • Lloyds Bank Commercial Finance
  • Berkeley Trade Finance Ltd
  • Regency Factors
  • IGF Invoice Finance
  • Team Factors
  • Giant

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We are a credit broker and not a lender and offer credit facilities from a panel of lenders

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