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10 Common Finance Hurdles UK SMEs Face (And How To Overcome Them)

If you run an SME, you probably are familiar with these all too well. But it’s easier to overcome these finance hurdles than you think!

First of all, let us begin by admitting and acknowledging the harsh reality. The UK economy has been through a constant grind of speculation, debate and uncertainty over the past few years, all thanks to Brexit. Without commenting on the issue, we would just like to mention that not all SMEs are happy about the way things have been unfolding. Nearly 40% of UK SMEs think that Brexit – if and when it actually happens – will leave them worse off in terms of financing and sales. That’s a very serious trend.

However, that’s only a part of the finance riddle. There are quite a few non-seasonal hurdles that SMEs have to face while applying for and getting commercial finance. Here are our picks (and some advice from our experts on how you can easily overcome them).

1. The Personal Credit Vs Commercial Finance Conundrum

This is by far the most common confusion we’ve seen SMEs struggle with. Much of this has to do with the fact that most SMEs are built ground-up without any solid plan for expansion. This, however understandable, is not the right approach. When you start a business, it’s advisable to treat it like a business. Sure, you can use your personal credit cards or even mortgage your home – but you need to know where to draw the line.

Personal loans tend to reduce your creditworthiness, making things difficult for when you want to get a business loan. The best way to overcome this conundrum is to separate personal and business finances as strictly as you can. Your personal creditworthiness should be a credit to your business – not a burden.

2. Bad Credit

This is the most obvious hurdle. If you have bad credit, you’re going to struggle to get a good deal (or any deal, for that matter). It’s important to know what impacts your credit in addition to the usual do’s and don’ts.

We’d like to note here that having bad credit doesn’t spell the end of the road by any stretch of imagination. We, at Commercial Finance Network, regularly broker bad credit loans for many otherwise successful SMEs. You can read more about our adverse credit mortgage services here.

3. No Credit History

Not many SMEs take business credit seriously, thanks mainly to the fact that most operate as sole traders. Quite naturally, it’s not very common for SMEs in the UK to have business credit history.

The easiest way to establish business credit history (you’ll need it when you want to apply for high-end commercial finance products) is to register your business and start trading regularly. Most companies, just by trading actively, are able to establish various credit tracks that help towards their credit history. To speed up the process, you can also use easy-to-access finance products like credit lines, business credit cards, overdrafts and so forth. Short-term finance products like bridging loans and invoice finance can also be very helpful in building a good credit score.

4. Multiple Applications

As is the case with personal credit, your chances of getting approved for a commercial finance product may get severely hampered by multiple applications. If you overestimate your creditworthiness and have half a dozen applications turned down, it’s almost always going to leave a dent in your business credit history.

This, however, is easily avoidable. If you want to directly work with lenders, make sure you are familiar with the lender’s expertise, expectations and track record. If not, you can send your applications through a reputed whole of market broker like Commercial Finance Network to improve your chances of getting an affordable and customised finance deal.

5. Going After Incompatible/Unsuitable Products

Another easy to avoid problem.

If you’re in need of commercial finance, make sure you know what exactly it is that you need. Specialty finance products are always more affordable than blanket packages. For example, many SMEs apply for a generic business loan to cover all sorts of expenses, instead of going for specialty, focussed loans. This not only makes things more expensive; it also increases the chance of having their application rejected.

An easy fix is to know what commercial finance products are available out there, and how you can best customise them to your needs.

6. Not Making The Right Points

This shouldn’t be a point of discussion, but we’ve seen too many SMEs fail to paint themselves in good light.

If you want to work with specialty lenders (like the ones we have on our panel), you will need to make sure that you know your business inside out. And by business we don’t just mean your day to day operations. You need to be able to demonstrate how you are planning to fuel the growth and overcome the competition. A detailed business plan that touches on all these point (and more) will always be helpful in getting lenders on board.

7. Weak Cashflow

This doesn’t and shouldn’t apply to every SME out there. However, you need to ensure that the cashflow numbers are always as healthy as possible.

Lenders, by and large, look for affirmative signs that tell them that you’ll settle the dues. And there’s no better sign of surety than strong cashflow numbers month after month.

8. Short On Security

Many commercial finance products require you to attach a security. It could range from personal guarantees and shares to properties and even vehicles.

Some specialty products (a good example is that of invoice financing) may not work at all without an inherent security. So, before you apply, know how these products work and what sort of security might be needed to get your application through.

9. No Trading History

Many SMEs try to apply for commercial finance right after they start trading. This is a rather hasty approach, because at that point, no SME can show any sign of credibility – no credit history, no volume of transactions and no track record.

To avoid this, we advise our customers to establish a long-enough trading history (typically six months or longer).

10. Tie All The Loose Ends

If your business has availed any loans in the past – however small the amounts – make sure you pay them off at your earliest, before you apply for commercial finance. If you aren’t in a position to make these payments right away, make sure these loans are represented correctly on your credit file, so that lenders can understand why you needed them and how you’re going to pay those back.

Commercial finance can appear daunting – but trust us, it’s anything but. With specialist lenders who know what your business needs, we’ve got you covered. To request more information or to request a call back, please call us on 03303 112 646. You can also get in touch with us here.

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Thousands of UK SMEs seeking finance to improve cash flow

Thousands of UK companies plan to use finance to improve their cash flow in the future, according to new research.

Analysis by Purbeck Insurance Services found that 28% of SME executives interviewed said they were turning to external funders, including to cope with late payments.

Todd Davison, director at Purbeck Insurance Services, explained: “Cash flow is the life blood of any small business. But for a whole variety of reasons, not least the current economic uncertainty, an SME business owner may find themselves looking at unpaid customer invoices, bills from suppliers and wage rolls, and wonder where the money is going to come from.

“Small businesses are owed billions in late payments; whole supply chains are affected and end up borrowing to fill the gap while they wait to get paid.”

However, he warned that using finance to resolve cash flow problems is a “double-edged sword” and business owners should first consider operational changes that might deal with short-term problems.

Davison added: “It would be prudent for the business to take the time to review its financial situation as a whole. In doing so, the owner may find some changes can reduce the need for, or at least the amount of, additional finance.”

Strategies could include restructuring current finance arrangements, reviewing credit terms to suppliers, outsourcing the late payment debt, improvement stock control or looking at alternative sources of income such as renting office or warehouse space.

Other reasons for sourcing finance included acquiring equipment (27% of respondents), supporting a business acquisition (10%), R&D (9%) or recruitment (7%).

Davison recommended that if business owners are providing personal guarantees to secure loans, it is important to consider insurance to protect their personal assets should they encounter repayment problems.

Written by Miles Rogerson

Source: Asset Finance International

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Government scheme to help small businesses ‘at risk of failure’

The CEO of online lending company Iwoca has written to the UK Chancellor warning that a government scheme to help small businesses access funding is “at risk of failure.”

Christoph Rieche wrote to Chancellor Philip Hammond on Thursday calling for a new task force to help repair the flagging Bank Referral Scheme.

The Bank Referral Scheme (BRS) was set up in November 2016 to help small and medium sized businesses (SMEs) access to loans and other financing. It came in response to a decline in lending to smaller businesses after the 2008 financial crisis.

Under the scheme, a bank that rejects an SME loan application must refer the business to an online platform. These platforms connect the business to fintech companies that might be able to offer them money.

Over 19,000 SMEs have been referred since the scheme was set up. However, Treasury figures show that only around 900 loans have been written. Iwoca said it is responsible for 55% of them.

“I am writing to you today because one of the cornerstone initiatives designed to help make finance more available to small businesses is at risk of failure,” Rieche wrote in his letter to the Chancellor, which was seen by Yahoo Finance UK. “Launched in 2016, the Bank Referral Scheme (BRS) has failed to deliver any meaningful impact.”

Rieche calls for a new task force, staffed by industry representatives and government staffers, to help “unlock its full potential.” Suggestions include making small businesses more aware of the scheme and using technology to make it easier to access.

“The BRS scheme remains one of the government’s potentially most transformational initiatives when it comes to making finance available to businesses,” Rieche wrote. “However, as with many ambitious targets, it does not come without complexity and more needs to be done to overcome them.

“We strongly believe this problem can be solved if banks, FinTechs and policymakers join forces.”

Rieche set up Iwoca in 2011. It offers online loans of up to £200,000 to small businesses, as well as online overdraft facilities. Iwoca has lent to over 25,000 businesses to date and the company announced in February it had raised over £150m in debt and equity funding.

By Oscar Williams-Grut

Source: Yahoo

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How could Brexit affect business funding?

With Britain set to officially exit the European Union on the commencement of Brexit – 29th of March, 2019 – business owners are waiting to see how the monumental change will impact lending and other financial services in the UK.

The business funding sector is a particularly important area of interest, as the uncertainty surrounding Brexit could cause lenders to shy away from investments and loan approvals for the sake of risk aversion. On the other hand, some lenders are optimistic and ready to seize any opportunities that may arise in the changing market.

More than 40% of alternative funding providers see opportunity

Brexit has always been steeped in controversy and negative projections, but many lenders aren’t buying into the fear-mongering. In fact, a marketing survey conducted by Allen & Overy showed that 43% of investors feel that Brexit may present additional investment opportunities due to other lenders backing out of the game during a period of uncertainty.

Businesses in the UK will still need funding after Brexit, but many investors will be hesitant to approve loans. Of course, that means that alternative funding providers and online credit brokers will receive more applications than ever as other conventional banks and institutions lower their acceptance rates to mitigate risk.

Entrepreneurs that are starting up may also find business funding to be problematic with Brexit on the horizon. However, websites like iLoans are often able to provide entrepreneurs with personal loans that can keep them covered when cashflow is problematic. The maximum loan value is £5,000 which may provide a vital lifeline to many small business owners. This is a route likely to become increasingly popular to resolve short term cash flow problems as conventional banks tighten their lending criteria and accept less applications.

34% of investors are concerned that Brexit may limit their ability to provide funding

While many brokers and alternative lenders are seeing opportunity, about a third of investors are worried that Brexit may reduce their ability to approve funding. Still, 29% of investors said that Brexit will most likely have no impact on their business whatsoever. Likewise, more than 40% of borrowers stated that Brexit will have no effect on their short-term funding plans.

A fair share of business owners are concerned that Brexit could increase the difficulty of gaining access to funding. In fact, almost 20% of borrowers have temporarily postponed their business funding plans. Overall, surveys suggest that there’s more optimism in the air than unease, but a fair amount of investors and borrowers aren’t even concerned about how Brexit will affect their businesses.

More than 65% of UK borrowers believe that Brexit has hurt their ability to obtain funding

Roughly two thirds of borrowers in the UK are already blaming Brexit for their inability to adequately fund their businesses. Whether or not Britain’s impending withdrawal from the EU is the true cause of their financial woes is another story, but this stat could be an indicator that lenders are already bumping up loan rejection rates.

If borrowers are already having trouble finding funding in a pre-Brexit environment, how will they fare once the full impact on the financial services sector has been realised? Fortunately, many analysts are speculating that the panic leading up to the change will be worse than the actual long-term results of Brexit.

Rising interest rates could cause funding difficulties for SMEs

Prime Minister Theresa May is trying to gain support for a withdrawal deal that would set up an agreement between Britain and the EU to govern post-Brexit relations. However, if the MPs don’t vote to back her deal, then we’ll be seeing a ‘no-deal Brexit’. That simply means that the UK would be exiting abruptly on 29 March 2019 without any deal in place to manage the relationship between Britain and the EU going forward.

The governor of the Bank of England has suggested that a no-deal Brexit could cause a sudden interest rate rise. Obviously, higher interest rates would be bad for many small businesses that are already having funding problems. Since SMEs and micro-businesses are at the bottom of the financial food chain, they would feel the impact of higher interest rates the most.

One third of investors say that Brexit will have no impact on their business

Fortunately, there are still plenty of lenders that will continue to provide funding to businesses during the pre-Brexit build-up. Whether their lack of concern will continue after a no-deal Brexit is yet to be seen. Although Britain has allegedly missed out on £4.5 trillion in economic growth over the past two decades, the UK’s financial sector isn’t all doom and gloom.

Case in point, the alternative finance sector has grown by more than 30% in the past year alone. This shows that banks and larger institutions are stepping back to play a more reserved role while alternative lenders are still mostly optimistic and open to funding small businesses.

Funding woes could give the advantage to freelancers and contractors over salaried employees

An altered job market balance is another interesting effect that Brexit will have on the financial services sector. Many companies that are struggling to fund annual salaries will look to outsource work to freelancers and contractors on a case-by-case basis in order to save on payroll expenses.

As a result, funding difficulties could lead to tighter budgets that call for hiring labour as needed instead of paying salaried employees. While contractors and freelancers could see an uptick in business, altogether this could lead to rising unemployment rates in industries where in-house employees can easily be replaced by on-demand labour.

What about London’s status as Europe’s financial centre?

As of the third quarter of 2018, the financial services sector was bringing in approximately £187 billion, accounting for more than 10% of Britain’s economy. The UK has also histrionically been Europe’s largest financial services market, with London not only known as the financial centre of Europe but also the financial capital of the world.

However, analysts estimate that Brexit could cause London to lose up to 10,000 jobs in the banking sector and 20,000 positions in the financial services sector. Altogether, reports indicate that up to £1.5 trillion worth of assets could be moved out of the UK.

Ultimately, London may still be a larger financial hub in terms of business volume than other cities in geographical Europe, but Brexit will mean that a new city must be named the EU’s financial capital – will it be Frankfurt or Paris?


Source: London Loves Business

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SMEs using invoice finance experience dramatic reduction in debtor days

Invoice finance firm Optimum Finance has seen a sharp increase in the last six months of new clients coming to them with an average of 90+ debtor days causing significant cash flow pressure.

Yet within three months of accessing invoice finance, Optimum Finance clients are experiencing a reduction in this ‘debtor gap’ to an average of 46 days, with some businesses seeing a drop of up to 58 per cent in the time taken to get invoices paid.

Average days sales outstanding (DSO) is a key metric in measuring the financial health of a business. The standard payment terms for UK businesses are usually 30 days. However, the actual time taken for monies to be received often goes far beyond this with some businesses waiting several months to receive cash for work already undertaken, or goods sold, three or four months previously.

This reduction in DSO is just the tip of the iceberg when it comes to the financial benefit experienced by firms choosing an enhanced invoice finance service which also effectively outsources their credit control function.

Optimum Finance has developed a cost savings calculator designed to demonstrate how its services can actually offer significant savings overall, rather than being another cost or overhead to the business.

This proprietary financial model shows SME owners how reduced DSO combined with the salary savings from not having to employ staff to chase unpaid bills, external credit check costs and interest savings on monies owed can actually make a positive impact on the bottom line in the first financial year working with Optimum Finance.

Commenting on the payment pressures faced by UK SMEs, Optimum Finance CEO Richard Pepler said, “Cash is the lifeblood of any business and not being able to get access to monies owed in a timely manner effectively paralyses commerce in this country.

“A lack of ready cash combined with no guarantee that payments will be made when they are due means strategic decisions to invest in new staff, resources, training, capital expenditure or growth plans are often put on hold or never carried out.

“It also has a knock-on effect to the time these SMEs take to pay their own suppliers and they end up locked in a vicious debt cycle, where their cash is actually sitting with the big corporations they do business with. Some SME directors also delay or don’t pay themselves in order to keep as much cash as they can inside the business.

“To combat this issue we have invested heavily in a highly experienced credit control team. This means our clients get access to specialist support and expertise in credit control and management, which in turn delivers long term cost savings.”

SMEs make up 99.9 per cent of all private sector companies in Britain, employing a total of 16.1m people and ploughing billions into the economy every year.

The UK late payments culture is more prevalent in some industries than others with construction, retail and grocery sectors often highlighted as the worst offenders.

In a bid to address this commercially crippling issue, the government issued new regulations in April 2017 forcing all large UK companies to report publicly on their payment policies, practices and performance. However, with little consequence for late paying large corporates, the situation has not improved in the last 18 months since its introduction.

In fact, the picture has deteriorated in the last 12 months. According to a recent report by UK payment experts Bacs, the UK’s smallest businesses face a bill of £6.7bn, up from £2.6bn in 2017, just to collect money they’re already owed.

The cost of recovering overdue money is now at an average of £9,000 for each business and, according to the Bacs report, “more than a third of small to medium sized enterprises (SMEs) coping with late payments are waiting two months beyond agreed terms to be paid. That’s double the number of businesses who said the same in 2017 (19 per cent).”

By Sarah Dunsby

Source: London Loves Business

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UK SMEs keen to seek alternative finance in 2019 despite Brexit

More than one-quarter of UK businesses expect revenues to grow by more than 10% in 2019, despite concerns over the potential impact of Brexit.

According to a report from asset-based lender Independent Growth Finance (IGF), their growth ambitions come despite nine out of 10 saying they have concerns about the future of the economy.

IGF’s Powering Freedom Report found that, among British businesses turning over between £1 million and £500 million, 69% of companies expect an increase in revenues in 2019.

To facilitate these ambitions, 71% of businesses are seeking an average of £1.1 million of funding over the next 12 months. This will be used to finance key areas of investment including technology (37%), staff retention (30%) and marketing (27%).

However, traditional lending channels remain slow, with 53% of businesses typically having to wait at least a month for a funding decision in 2018, while nearly one-third have waited three months or more.

As a result, more businesses are considering alternative forms of finance, IGF executives say.

While traditional bank funding remains the top source of finance (67%), the report found that 27% of businesses now use invoice financing and 22% use other asset-based lending facilities.

John Onslow, chief executive officer of IGF, said: “British SMEs are the lifeblood of this country. It is encouraging to hear how many are forecasting meaningful growth in 2019.

“Such a large number of businesses seeking more than £1.1 million in funding shows that businesses want to seize control of their financial futures. Yet our findings suggest many struggle to find quick and flexible funding. With uncertainty on the horizon, SMEs are refusing to stand still. Instead they are pushing for ambitious growth and alternative funding solutions.”

Source: Asset Finance International

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Assessing Your Business Funding Options

Whether you’re a start-up, growth stage or established business, there are a number of external funding options available to you. Whether it be a short-term working capital injection, a long term growth agenda that needs financial backing, or a large asset purchase; there may be more funding options than you might think.

Selecting the correct source of finance for your business will require a number of key considerations, depending on your business needs and circumstances;

  • Is it just money that your business requires? Would your business benefit from the additional expertise of an equity investor?
  • How much funding does your business need?
  • Why does your business need the funding? Is this a short term or a long term requirement?
  • How much can you reasonably afford to borrow and what are your preferred payment terms?

Asset Financing

Finance the purchase of new machinery or equipment via an asset finance arrangement, allowing you to spread the cost of the purchase over an agreed time period. Monthly repayments of principal plus interest gives a distinct cash flow advantage to your business. You can also borrow funds against assets which you currently own, where your existing assets may or may not act as direct collateral against the loan value.

Bank Financing

Bank Loans – Commercial bank loans allow your business to borrow a sum of money in return for regular repayments of principal plus interest. You’ll achieve the best interest rates when you’re able to secure the loan against assets within the business. Though, if you are unable to do this, bank loans are still available, just at a slightly higher interest premium.

Invoice Financing – The ability to recover money tied up in outstanding invoices. In return for a percentage of the invoice value, the financer will pay the invoice value upfront. This gives a distinct cash flow advantage as you will not need to wait 30/60/90 days before receiving the cash from customers.

Business Overdrafts – A short term funding option giving you access to extra funds, typically for working capital purposes. Interest rates are based on your ability to repay the overdraft and are typically slightly higher than that of a bank loan.


Crowdfunding, whilst not suitable for all businesses, gives the user access to a large pool of would-be investors who may only be able to invest a small amount of money in return for shares in the business. The strength of the crowd means that you can access your required funding amount via a large number of investors.

Angel Investors                                 

Equity financing may be your preferred financing option. Angel investing is a way of private investors investing their own money in return for an equity stake in your business. Like Dragons Den, you may have the option of working with a solo investor or a group of investors. Angels may take an active role in your business and can be a useful source of business knowledge, mentoring and contacts. There are many tax advantages for Angels such as Enterprise Investment Scheme and the Seed Enterprise Investment Scheme. It is worth finding if your business is eligible as this can help attract angels to invest.

Venture capital and private equity

Both venture capitalists and private equity companies will hope to invest in your business, assist in accelerating your growth, and then exit the business having made a profit from the appreciation of the value of the business. Private equity tend to invest in more established businesses, whereas venture capitalists try to identify early stage companies with high-growth potential.

Source: Business News Wales

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Fintech firm urges SMEs to look beyond conventional bank funding

New analysis from ThinCats, the fintech lender to mid-sized small firms, shows that Manchester has a higher proportion of high-growth companies and businesses that are more likely to require funding during 2019 than the UK average.

ThinCats also discovered that businesses in Manchester have been quicker than most regions to look beyond the banks for funding since the financial crisis.

Almost two-thirds (64%) of Manchester-based SME loans were sourced through banks in 2007.

This figure has come down to 53% more recently, slightly below the UK average of 57%.

ThinCats is urging Manchester’s business owners to make sure they consider the increasing number of non-bank lenders when looking for funding in 2019.

Richard Lamb, director regional business development at ThinCats, said: “We analysed more than 200,000 businesses across the UK and found that the likelihood of Manchester businesses needing external funding in 2019 is significantly higher than the UK average.

“This may be to expand their teams, to help service new contracts, or to invest in new equipment.”

He added: “Manchester has proportionately more high growth companies compared to other parts of the UK.

“Unfortunately, these are exactly the types of companies that the high street banks struggle to fund.

“Half of businesses that are declined funding by their banks fail to look elsewhere. It is vital that Manchester’s entrepreneurs don’t give up at this stage.

“We estimate there are about 3,800 businesses in Manchester alone that we could help with funding.”

He said ThinCats has almost £1bn of capital from institutions and other long-term investors waiting to be deployed across the UK.

Further analysis by Thincats claims that Liverpool-based companies have been relatively slow to look beyond the banks for funding since the financial crisis.

It says that 78% of Liverpool-based SME loans were sourced through banks in 2007, and this figure has come down to 57% more recently, in line with the UK average.

Richard Lamb said: “There are around 1,900 SMEs in Liverpool, alone, that we could help with funding.”

Source: The Business Desk

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Alternative finance ‘becoming vital’ for SMEs in north

THE ability for small businesses in Northern Ireland to access alternative forms of finance has become a vital factor in their successful growth, the head of a Belfast accountancy firm insists.

Since the financial crash and credit crunch, the funding void left by traditional lenders has been filled by boutique funders and alternative finance, which can allow SMEs to access finance for a variety of different needs, from long term investment through to funding for short term working capital.

But according to Conor Walls, managing director at Exchange Accountants, the key to small firms securing successful alternative financing is to understand what their requirements are and to know what’s on offer, so that they can secure the best possible deal for their business.

With the continuous improvement in technology and the ever-growing popularity of online banking, banks and building societies have continued to close branches across Northern Ireland, and by the end of 2018 over 43 per cent of bank branches available in 2010 will have shut.

“As a result, businesses have had to adjust to the reality that accessing finance from traditional lenders has become much more difficult, and the ability for SMEs to access finance to grow their business is no longer a simple case of hoping the local bank manager likes the ‘cut of your jib’,” Walls says.

“Businesses can access alternative financing through a range of different forms, but most commonly it is secured via friends and family, peer-to-peer lending, angel investors, venture capital investors, crowd funding, equity finance, invoice financing and asset finance.

“Funders will often have key criteria which must be satisfied before any finance is provided, and borrowers can expect to be required to explain in detail what the growth potential of the business is and how the money is going to be used, as well as showing how they will be able to repay the borrowings and what security the borrowers can offer.”

He added: “The financial world is constantly evolving, and it’s no surprise we’ve seen local businesses embrace alternative finance.

“In recent months we’ve found ourselves working with clients to access alternative finance for a variety of needs, from loans in excess of £100,000 for long term investment through to funding for shorter term working capital requirements”, he added.

Funders will often have key criteria which must be satisfied before any finance is provided, and borrowers can expect to be required to explain in detail what the growth potential of the business is and how the money is going to be used, as well as showing how they will be able to repay the borrowings and what security the borrowers can offer.

Securing alternative finance may appear to be a daunting prospect to the uninitiated, but according to Walls the most important step business owners must take is to educate themselves on the pros and cons of each method of funding and ensure they are as prepared as possible.

He added: “Having a real understanding of what’s on offer is crucial to securing successful alternative financing, and I advise every business owner to ask questions and consider their options.

“We spend a lot of time working with our clients to help them secure the funding that suits their business needs. This ranges from identifying their value proposition, preparing profit and loss and cash flow projections to show funding requirements and, more importantly, the ability to repay any borrowings, through to preparing an application and meeting with a funder on their behalf.

“The key to successfully securing alternative financing is to know what your requirements are and to arm yourself with the knowledge to identify the best possible deal for your business,” he added.

Established in 2011 with officers near Belfast City centre, Exchange Accountants provides a range of accountancy services and tax advice to a wide variety of locally based SMEs and individuals.

The company has developed a specialism in digital and cloud accountancy services and was the first accountancy practice in the north to be recognised as a Gold Partner with market-leading cloud accountancy software provider Xero.

Source: Irish News

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6 ways to ensure your SME gets funding

Over half of SMEs do not obtain the funding they need to survive, says Giles Fuchs.

It’s estimated that more than 100,000 businesses in the UK are looking for funding at any one time. Yet only a small percentage will secure sufficient funding to enable them to grow and expand into credible businesses that have a real market impact.

Clearly, there’s a problem and it is contributing to the failure of as many as nine in 10 early-stage businesses.

For many young companies, securing the scale-up funding they need is still challenging. The UK has a great reputation for supporting start-ups, it’s ranked third by the OECD, but only 13th for its ability to help companies secure the funding they need to become viable.

Also, the prospect of Brexit currently casts a shadow over the UK economy. Even though the Government has recently pledged to provide up to £200m of additional investment in UK venture capital and growth finance in 2019-20 if the European Investment Bank withdraws its support after Brexit, it is still a small percentage of the funding needed. Recent research from small businesses finance provider Liberis, revealed that over half of UK SMEs are still unable to access the funding they need to grow.

UK SMEs contribute some £200bn to the UK economy, so ensuring they can access the funding they need is vital. In the current uncertain climate, to try and secure such backing, whether from private sources, such as high-net worth individuals or family offices, or institutions, it has never been more important for early-stage companies to plan properly and set out a compelling vision.

Develop a proper plan

One of the most common reasons that early-stage businesses fail to raise further funding is a lack of proper planning. Typically, they have grown with less regard for proper structure and process and more emphasis on entrepreneurial energy and drive. However, to secure serious funding from credible investors, management teams need to put together a comprehensive plan which identifies the type of investor they are targeting, best timing for the approach, the quantum of funding sought, and how the company will cope with the rigour of the questions that investors will ask.

Don’t be shy to show your passion

Investors are more likely to back a business if it’s something they’re inspired by, so be passionate about your company and others will buy into it. Remember, you will be one of hundreds if not thousands of businesses your potential investors will be considering, so bringing enthusiasm and excitement to your pitches and meetings will help you stand out. It will help engage investors and help persuade them that you are genuinely creating a business worth backing. Retaining the passion that first prompted you to set up your business could be key in unlocking the funding to help it grow.

Create a compelling narrative

Given young companies are at an early stage in their growth, they will most likely not have delivered substantial commercial success. So, it’s important that you create a compelling narrative for the company as that is what investors will buy in to and will persuade them to back a business. It’s important to have a clear, concise proposition, which outlines the market potential articulately – and why someone would want to invest in it.

Demonstrate the growth prospects

Showcasing your strategy and proposition is the starting point but practically demonstrating the growth potential of the business is crucial. Anchoring your vision in a clear business plan that outlines in workable, pragmatic steps how the company is going to secure its growth will be what investors are expecting.

Have a strong management team

Having a strong management team that investors can see is capable of delivering on the vision, strategy and business plan that you have put together is essential. Investors might be excited by your plans, but most are hard headed and want to know who will be responsible for delivering on these plans. If you can’t show that you have the management bandwidth in place, then you will struggle to secure funding.

Ensure the timing is right

This is the most intangible of all the factors outlined, but timing really is key. It’s important to only consider seeking investment when the business is in a strong enough position and is performing well enough to support this. It’s vital that your company has the structures in place, the systems, the human resources and IT support to provide a proper foundation for your fundraise. You can still go for funding without all this being in place, however, you will increase your chances of success immeasurably if this has all been thought through and implemented.

Seeking funding may seem daunting, the hurdles may seem high, even insurmountable, but treat this exercise with the same rigour and focus as you have to take your business this far, and it is more than likely that you will be rewarded.

Source: SME Web