Whether your only just starting to research your options or your just looking for a bit more information before you make a decision, you may be surprised to discover there are a few options available to you when choosing 'How to fund your SME', so we have highlighted our top 3 to hopefully give you a some more insight.
1 – Bank Loans
Undoubtedly the more obvious choice but is it the best? Bank loans have been the go-to way of finding funding for new businesses or for those that are looking for a cash flow boost. You need to make sure you do your research as there are many different types of loans which are available to you so make sure you choose the one which is the right fit for you and your business.
Pros – You have undoubtedly the most choice when choosing a loan from the bank and you tend not to have to give up any control over your business.
Cons – The loans will be subject to your credit score meaning if you have fallen into hard times at any point and missed any payments, the loans available might have higher interest rates than expected or you may not be eligible at all.
2 – Business Angels
You may not of heard of these heavenly beings. These individuals will invest in your business in exchange for a share in your company. Sometimes this is done in groups or just a solitary individual. Its always advised to do a bit of research and getting to know the angel investor before shaking any hands.
Pros – These angles usually come with a wealth of experience, meaning they will help guide the business down the right path or help a business return to the right path
Cons – You will usually have to give up a share of the business which is usually a permanent fixture but can also be temporary based on time frame or buying that share back. If you want to retain 100% control of the business, Angel investors are not the correct path.
3 – Bridging Loans
These loans are rather short term and there purpose is usually to help get a business off the ground or help fund a gap that is needed in a business. These types of loans are great if you are confident in your return and are not wanting a long term investment.
Pros – With the right company, acquiring a bridging loan can have a very quick turn around so receiving the funding for your business, especially if there are time constraints, can happen quite quickly.
Cons – You do need to pay the loan back just as quickly as you have borrowed it and you may need to provide collateral (Subject to the business)
There are many options out there to help your business find the funding it needs. The main thing to consider is making sure which ever route you take, it's right for you and the business for the long haul. (Even if you opt for a shot loan)