‘Business owners and managers should spend the time researching all the options available,’ advises Bibby Financial Services chief executive David Robertson, ‘in order to avoid rushing into an attractive deal that might not be the best solution for the business in the long term.’
Bibby offers the following tips:
- Seek advice – there is a plethora of advice available on securing the best funding for your business from a number of financial specialists. Find a specialist who understands your business and requirements and heed their advice before rushing in to any decisions
- Involve funders from the outset – involving your funders in the planning process means you can work together to ensure the right deal at the right price
- Be specific – decide how you are going to use the funds. Funders prefer to know precisely what the money will be used for and how it will benefit the business
- Provide information – provide accurate and clear information such as management accounts, details of contract orders, assets to be purchased and any other information deemed relevant
- Inform the financer – funders like to know what the past, present and future positions of the business will be
- Realistic targets – don’t assume you will get the amount you want at the price you want to pay. Planning for different scenarios will help you to manage your expectations and avoid disappointment
- Advance planning – make sure you plan your borrowing time line realistically, allowing some slippage time for unforeseen events
- Timescale – be aware some lenders take longer than others to reach a decision, so make sure you build in plenty of time before you actually require the funding
- Build relationships – finance companies are people-led service businesses, use this to your advantage and find the right partner and aim to build long-term relationships with them
- Communicate – once funds are successfully secured and borrowed, invite the lenders to see how their money has been used. This generates confidence and trust, making further requests for funding in the future a much smoother process
See also: Secured vs unsecured business loans