Despite reports that bank lending to small businesses is still failing to meet targets, there is increased demand for credit from small businesses seeking among other things to refinance existing loans and to fund a growing amount of takeover activity.
Whether your business is in either of these categories or you are seeking finance for other purposes such as to invest in new equipment or machinery, purchase property, upgrade technology, or maintain cashflow while a new product line kicks in, the fact is that the need for finance is a perennial concern for small businesses. And it is also becoming increasingly expensive.
Here are three tips for reducing the cost of finance:
Plan ahead - Quick money is usually expensive money. By planning your finance requirements well in advance, preferably up to a year ahead, you can prepare a robust application, shop around for the best source, and negotiate the most favourable terms. Indeed, the mere fact that you are planning your funding so far in advance will count in your favour and hopefully give you more leverage.
Make the lender bid for your business – Approach a number of sources with a well-prepared funding requirement and ask them to submit a proposal. These days, even banks are used to having to bid for your business. Use your track record to leverage a better deal on charges or the amount of collateral required.
Ask for more than you need – If you are too modest in your request fearing that to ask for more would reduce your chances of success, you risk having to return at a later date to ask for a top up, which will raise questions about the reliability of your business plan. It is also a lot more expensive to process two applications rather than one.
We can help you research and prepare requests for finance, and even conduct the negotiations for you. Contact us today to see how we can help you find cheaper finance.
Tags: SME, sole trader, UK cost savings
