1 Sept 2021
Now that the UK is in a period of economic recovery following the latest lockdown, many business owners are looking to expand their operations and obtain funding for growth. If you’re one of them, check out these 10 things you can do to improve your chances of getting approved. Even if your credit score is less than perfect, you could still be eligible.
The first step is to develop an understanding of the different funding options available to you. Gone are the days of your business bank being the only port of call. Today, there are a variety of finance options out there to suit different purposes, circumstances and sectors.
Do you take customer card payments?
You might be eligible for a merchant cash advance. The lender will communicate with your terminal provider to see how much cash is flowing through your business, and provide you with a loan based on your turnover. You pay it back through a percentage of your customer card payments, making it flexible and affordable.
Do you need to purchase new machinery or equipment?
You might be eligible for assent finance. If you don’t have the cash to purchase an asset upfront – or would rather lease one – this could be the funding for you. There are a few options to choose from: hire purchase lets you spread the cost of an asset (and you own it at the end of the term), while equipment leasing lets you upgrade later on.
Merchant cash advances and asset finance are only two of many business funding options out there. You can use the Funding Options platform to find the most suitable type for your needs. Just tell us what you need the funding for, how quickly you need it and how much you want to borrow.
When you apply for business funding the lender will request information about your company’s finances. This should be presented in a clear way. As well as having the facts and figures to hand, make sure you have a real understanding of your business’ finances and how you’re going to fund its growth in a sustainable way.
Be sure to bolster your aspirations for growth with a solid business plan. Factor in your growth divers and create forecasts for them. Lenders will understand that your performance may have been impacted by Covid-19 and Brexit – but they’ll also want to know what you’re doing to mitigate challenges, and how you plan to recover and grow moving forward.
If you want to apply for business finance, bear in mind that lenders will want to see how you manage your cash flow. It’s worth producing longer-term financial forecasts with cash flows that take into consideration your suggested debt structure.
If the UK is to reach its targets of reducing emissions by 78% by 2035 and become net zero by 2050, every business needs to play its part by implementing green practices. If becoming green is part of your growth plan, you might be eligible for green finance.
You can apply if you’re a green business whose core mission is rooted in sustainability, if you’re looking to fund a “one-off” green project or if your company wants to purchase a green asset such as an electric vehicle or a solar panel.
Even if you get rejected by one lender, it doesn’t mean you’ll be rejected by them all. Many businesses struggle to obtain funding through their bank, for instance. Fortunately, there are dozens of non-bank lenders out there today with an appetite to finance the SME market, including lenders that specialise in certain sectors of the economy.
While taking a proactive approach to the competitor landscape won’t directly affect your chances of being approved for funding, it will help you anticipate changes in the market and provide you with the insight you need to adapt, pivot and grow in a way that caters to your customers. What are your competitors doing to help future-proof their businesses?
When you apply for funding, lenders will assess your business’ creditworthiness to understand the level of risk involved in lending to it. Your business credit score ranges from 0 to 100, with 0 representing a high risk and 100 representing a low risk.
We’ve published an article on how to improve your business credit score, which is well worth a read if you’re considering getting finance now or anytime in the future. In the meantime, here’s a quick overview of what you should do:
Check your credit score
Pay on time whenever possible
Be aware of your clients’/suppliers’ credit situation
Submit accounts on time and in full
Monitor your credit utilisation ratio
...but only if you can afford the repayments and there isn’t a loan available on better terms.
The Recovery Loan Scheme (RLS) is a follow-up to the CBILS and BBLS and is designed to help businesses manage cash flow, investment and growth post-lockdown. Up to £10 million is available through different finance types, and you won’t have to provide a personal guarantee if you borrow less than £250,000.
To help support more lending to SMEs, the UK Government is providing an 80% guarantee to RLS lenders. But while a key aim of the Recovery Loan Scheme is to improve the terms on offer to you, if a lender can offer you the choice of a commercial loan on better terms, without requiring the guarantee provided by the RLS, they should do so.
Did you know you can find out how much you could be eligible for in just a few seconds? At Finding Options, we’re dismantling business funding barriers by providing business owners like you with quick and easy access to finance. Our Funding Cloud technology validates your business profile and matches you with the funding industry’s largest lender network.
What’s more, our dedicated Business Finance Experts are on hand to help you through the whole process, from application to money in the bank. So, what are you waiting for? Kickstart those growth plans with personalised business funding today!
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