After two years of uncertainty due to the Coronavirus pandemic businesses were hoping for an improvement in outlook during 2022, however, it seems that the difficult times are set to continue. With the outbreak of war in Ukraine, surging fuel prices and an increase in National Insurance contributions, that will increase the financial strain on UK households, the struggle is set to continue. Financing business growth in 2022 may require a mix of tried and tested strategies along with some modern methods; we will take a look at some of these strategies in more detail below.
Growing a business is a difficult balance between taking on larger contracts, but not overstretching financially to the point of collapse. There are many different ways of financing business growth, but what is available to an individual business and what would be best for the individual circumstances isn’t always obvious. A commercial finance broker is well placed to get a good understanding of your business and then input their knowledge and experience to offer you the best advice, as well as to help you secure the best deal possible. Some of the options for financing business growth in 2022 include:
- Bank loans
- Invoice finance
- Asset finance
For more information on any aspect of financing business growth book an appointment with MC Commercial Finance.
Cash Flow for Business Growth
Whichever source of business finance is most appropriate for your business, the primary purpose is usually to receive a cash injection. Lack of cash flow is the single biggest reason that most businesses fail, you can find out more about the importance of cashflow in this recent blog. By correctly utilising appropriate commercial finance you can ensure a steady supply of cashflow allowing you to take on bigger projects and grow the business while maintaining other financial responsibilities such as paying staff, suppliers, other overheads, VAT and Corporation Tax. Below we will look at each of the types of finance in more detail.
One of the most traditional sources of business finance is a bank loan. In 2022, bank loans are still available but due to the ongoing uncertainty may be more difficult to secure than in the past. A bank loan may be secured or unsecured, and provides a cash injection into the business. The bank that your business banks with may be able to provide a loan, however, this isn’t always the best deal available. High-street banks particularly may have higher interest rates, meaning that overall, you pay more to borrow the money. Conversely, looking at your banking history your business bank may be willing to offer you a better deal or at least a deal based on your individual circumstances.
A popular source of finance, invoice finance allows you to get paid for an invoice faster than you would usually. Securing invoice finance is often easier than for some other types of commercial finance; this is because the business is not actually the debtor. Essentially you can use invoice finance to pay for materials, labour or plant that is required to complete an order that has been made. Advance payment of the invoice is made by the lender allowing you to complete a larger order than would otherwise be viable, once the order is complete the invoice paid by your customer and the loan repaid. You can find out more about invoice finance here.
Asset finance is another traditional type of business finance. This type of finance is specifically used to purchase assets. There are several different types of asset finance depending on what you are purchasing for example a computer or a multi-million-pound piece of plant, and whether you want to own the equipment at any point. Particularly for larger purchases it is always wise to seek expert financial advice before taking on an asset finance deal.
From Government, to local authorities, to charities and industry specific organisations there are often grants available for small and medium sized businesses to help support business growth. What is available to your business, and what would best suit your requirements is often a minefield though. Eligibility and the application process are often stumbling blocks to securing a business grant. A commercial finance expert or your accountant may be able to help sift through the options, as well as helping with support through the application process.
A modern method of securing business finance for growth is crowdfunding. Popular with modern, innovative businesses crowdfunding allows businesses to get small amounts of investment/donations from large numbers of people. There are different types of crowdfunding depending on your requirements, and dedicated platforms such as Kickstarter or GoFundMe have plenty of information to help get you started if you are interested in utilising Crowdfunding to boost your business growth in 2022 and beyond.
How a Commercial Finance Broker Can Help
Loans and other types of traditional business finance are readily available from high-street banks and other lenders, but this is not usually the best way forward. An FCA regulated commercial finance broker, such as MC Commercial Finance, will work on behalf of your business, they have a wealth of experience enabling them to offer expert advice, and they often have access to broker only deals. Applying for credit and getting refused can damage your credit rating making it harder to secure credit. A broker has a thorough understanding of commercial finance, they know the credit agencies and which would be the most appropriate fit for your requirements. A broker will complete the application and liaise with the lender making the process as hassle free and fast as possible enabling you to concentrate on running your business while simultaneously financing business grow in 2022 and beyond.