Busting 5 myths about financing business growth
The internet has revolutionised the way businesses access finance for growth.
With so much information available at the click of a mouse, it’s possible for business owners to educate themselves on the options available before approaching a lender.
This helps businesses understand their options and ensures that they are getting a suitable finance facility for their growing needs.
But unfortunately, for every piece of accurate guidance you can find online there is an array of misinformation that is causing many business owners to be put off accessing funding.
Don’t let this false information restrict your business growth.
Here we separate facts from fiction by busting five of the most common myths we hear.
1. Approval is determined by a heartless algorithm
Given the increase in online application forms, it’s understandable that many business owners believe the fate of their finance request is determined by an algorithm that doesn’t necessarily take all their information into account.
But, whilst a lot of the application process has been digitalised, the final lending decision will still be determined by a person and not a computer.
When making their decision the lender will look at a wide variety of both objective, number-based factors as well as more subjective considerations, like your business and marketing plan.
This is why it can be extremely beneficial to find a funder that understands your business and its industry as their sector knowledge will often increase your chances of success.
2. Start-ups are never eligible
Whilst a lack of trading history can make access to some forms of finance a challenge for new businesses, there are types of funding which are ideally suited to those just starting out.
The commercial finance market has grown substantially and there is a wealth of finance options for start-ups to choose from.
Some facilities, such as start-up loans, can be secured based on a business owner’s personal finance history whilst working capital can also be released from the company’s sales ledger or other assets through solutions such as invoice finance or asset finance.
So, if your business is still in its early stages, you needn’t let a lack of funding hold you back.
3. I need to see my bank manager
We get it. You have your business account, savings account and credit card all with the same bank, so when you’re looking for funding to grow your business you automatically go to your bank manager first. But, is this the best route to take?
It’s important to keep in mind that your bank manager will only be able to discuss finance options that they are able to offer. This could lead to your business securing a funding facility that might not be suited to its needs.
For example, if you need funding to purchase new machinery, asset finance might be a better fit than a business loan. Or, if you want to boost your cash flow to take on new orders, invoice finance solutions may be an ideal option.
Whatever your funding requirement, to ensure your business is getting the most suitable facility it is prudent to research the options available on the market.
4. Non-bank lending is a last resort
With so many businesses still using their bank as the first port of call, it’s not surprising that these borrowers only turn to non-bank lenders after being rejected.
But there are a number of reasons why business owners choose the growing range of non-bank to help their business reach its growth ambitions.
Whilst a bank loan will simply inject funding into a business, more specialist and targeted options come with additional benefits such as increased flexibility, industry expertise or additional services.
For example, as well as providing fast access to working capital, invoice factoring solutions also include a dedicated sales ledger management service to reduce in-house overheads and improve collection times.
5. Approval takes forever
Whether you’re looking for fast access to working capital to take advantage of a new order or you’re looking to expand your current offering, you’ll be eager to know how quickly you can get your hands on the funding needed to grow your business.
Whilst it’s true that different funding products and providers have varying approval times, many lenders will be keen to get your application reviewed and approved as soon as possible.
Often, it’s the time taken to research and compare options and then compile all the relevant documentation that takes the longest.
A commercial finance broker can help in this process by using their market expertise to quickly identify the best facility and lender for your specific needs so that you don’t have to approach each individual lender separately.
The important thing to remember here is that the sooner you take action and apply for funding the quicker you’ll have money available to you. So don’t let this fear of long approval times stop you from accessing the vital funds for growth.
If your business needs finance for growth contact us on 0800 9774833 or request a call back to discuss your requirements with one of our expert funding consultants.