Securing debt finance – is it right for your business?

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Our Midlands Team explores the process for securing debt finance for your business.

Published: 26 September 2018
Focus: Blogs, MEIF

For small and medium-sized enterprises (SMEs), identifying and securing the right finance to grow your business can be challenging.

Debt finance remains one of the principal sources of funding for small businesses in the UK. But what are the options?  What is the process?  Or how can you secure the right finance for your business? It is essential that you select the right funding can help your business grow. Luckily, there’s plenty of choice out there so it’s important to keep the below factors in mind when considering your options.

Our Midlands team highlight some of the key steps that businesses can take to make an impression with lenders and attract the right debt solution that will be best suited for your business.

1. The business growth cycle

The first step is to identify the stage of the growth cycle that your business is in, as this will impact the type of funding you can access. Typically, debt financing is available to companies at the ‘growth stage’ as they are profitable and usually have a positive cash flow. More than anything, lenders want to ensure that you can repay your loan. If you can demonstrate that your business is profitable, then you’re 90% there.

2. Identifying business goals and milestones

It’s important to be clear on two things before you start searching for funding: how much you need and what you need the money for. Ideally, your business plan will include the non-financial and financial goals your business wants to achieve, outlining any need for capital expenditure necessary for accomplishing those goals. This should ensure that you apply for the right amount of funding, from the most suitable lender for your business needs. Don’t worry if your business plan isn’t comprehensive, Maven can support you in creating the foundations of a plan for your business.

3. The hard data: looking at the numbers

A company that is in the growth stage will have to show this in its financial data. A lender reviewing an application for funding would expect to see projected turnover, margins and cash flow, as well as clear consideration of worst-case scenarios that outline how, for example, cash will be affected by sales that are lower than expected. These financial metrics will help a lender to understand your business better and are key indicators that show which type of funding is most suitable for your needs.

 4. Getting the right financial advice

There are many benefits to choosing the right source of financial advice for your business, such as the ability to access specialist expertise which can assist the lending process, as well as ensure that your business plan meets the financing criteria that lenders look for. It’s important to do your research as there are plenty of sources of financial assistance on the market, including banks and other advisors. Keep in mind that the best type of financial support will provide you with impartial advice, most relevant for your business.

If your business is in need of finance to help unlock its growth potential, MEIF Maven Debt Finance may be able to help. Contact Maven’s local team today to find out more.

Posted in:
Blogs    MEIF

So, how can we work together?

We provide flexible capital and seek out complex situations in which our capital and strategic support enhance value for all stakeholders are at the heart of our work. If your business is in need of finance to help unlock its growth potential, the Finance Durham Fund may be able to help.

Contact our team today on 0191 731 8595.

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