We’re often asked to list the basic types of business finance that are available.
At See Business Loans, rather than present long lists of product names and detailed explanations, we prefer to discuss our client’s exact situation and the types of funding solution that might be applicable. That avoids listing lots of approaches that simply might not be the optimum (or even an available) solution for you in your unique business circumstances.
Recognising this risk as well as the limitations of the space available in a typical blog of this nature, we’re pleased to offer below a brief list of just some of the business finance approaches that might be options for you.
- conventional loans. Some of these may be unsecured but that will typically assume your business has a substantial trading history and one that’s success-based. Small companies or those with unclear or variable trading histories may need to secure the loan against an asset or underwrite it by personal guarantees from directors (which in turn might include security against their assets);
You might see this approach described as “debt finance”;
- equity finance. This usually involves an investor (or investors) taking a share of your company and its equity, in return for a substantial capital injection. That share of your business will give them a significant say in how you run your affairs. You will typically need to have at least some trading history in the shape of accounts in order for this approach to go forward;
- equity re-finance. This basically means you’ll be using the value of any assets you have (minus any outstanding finance debt on them) and freeing that up to use for business finance purposes;
- Business Angels and private investors. In a sense, these are closely related to equity finance above except that they’re more commonly found in the early developmental stages of a company looking for business finance lending. Such lenders will be looking for exceptional prospects and a high degree of latent talent in the business. They may be happier to take higher risks but they will also expect higher returns than some other forms of funds provider;
- invoice factoring / discounting. This is a form of funding aimed at companies that are either struggling with credit control (i.e. getting their customers to pay) or those who just need immediate access to cash when they raise an invoice. It’s usually an approach designed to speed cash flow and therefore provide rapid funds for business re-investment;
- personal loans. In some cases, it might be advantageous to take a personal loan (perhaps securing that on your own assets) then lending or investing the sums to or in your own business. There are pros and cons to this approach and we will happily discuss those with you;
- venture capital. This might cover a wide range of potential approaches. Venture capital companies are looking for high-return prospects and this approach might typically be slightly more common with larger business operations.
In the above, we have really only scratched the surface of the business finance options that might be available to you.
It’s also worth repeating that because these options might be available, doesn’t necessarily mean that they’re all equally suitable for a given individual business and its circumstances.
Our primary role is to match your position with one or perhaps a range of solutions that will be appropriate in your context. Of course, we’ll need to know more about that context before we can offer any meaningful observations.
So, why not contact us for an initial and entirely non-committal discussion? We’re waiting to hear from you and would love to help!