|
|
|
|
How to raise small business finance. Once you have completed the purchase of a business you may need to raise additional finance. There are several ways that you can approach finding small business finance, these suggestions along with those listed in finance to buy a business are common solutions. You should always seek professional advice before committing to any type of small business finance. Your accountant will probably be the best advised as they should already know you personal and business situation. Your accountant will also advise you of the best type of finance based on your current and future tax position.
Some common types of small business finance are:
Normal business loan
Business loans are based on security against the assets of the business. This is probably the most common way to raise small business finance. If you already have a good history of borrowing with a lender it is probably worth approaching them first. If you have a good relationship with your business bank they should be happy to discuss your options with you. It will save you a lot of time if you deal with a lender who already knows you and your business. Once you have good credit history it may be possible to secure finance without giving any additional security. See our page on small business loans
Business Overdraft.
This form of small business finance can be very expensive if not used wisely. Generally this is only used for a short term, and in exceptional circumstances. Care should be taken that the overdraft is no bigger than necessary; this should be determined by producing a cash flow forecast. This cash flow forecast should be regularly checked. Lenders will usually require some form of security in order to grant an overdraft facility especially for new, or smaller businesses.
Chattel Finance
This is used for the purchase of plant and machinery; this is usually commercial hire purchase or equipment leasing. This method is quite a popular form of small business finance and may have tax advantages for your business. It is well worth shopping around for chattel finance as fees and interest charged varies greatly.
Once you have decided on the best type of small business finance you will need to write a loan proposal.
See our page on How to write a loan proposal
| |
|
|
|
 |