Finding Business Funding in a Challenging Environment

www.businessfunding.co.uk

Here at the Good Web Guide, we have been getting the low-down from the new independent business funding guide, BusinessFunding.co.uk on the challenges that companies now face in seeking financial support and on how to overcome the obstacles. Here's what we found out:

Finding funding for your business is very difficult in these post credit-crunch times. At BusinessFunding.co.uk, they recently discovered that the number of public sector-backed funding sources available to UK companies has shrunk by at least a quarter in the last year alone, and the number of grant schemes has shrunk by a similarly large amount. On top of that, bank lending has also been a cause for concern recently. The Government keeps putting pressure on the banks to lend more to small and medium enterprises but many businesses are still finding themselves unable to secure finance.

Companies in certain regions of the UK may be finding it particularly hard to find funding and finance at the moment, with the North West and the Midlands faring particularly badly as a result of recent fund closures. And with spending cuts progressing apace across a wide variety of UK business funding sources, this trend looks set to continue well in to the future.

LESS WELL-KNOWN FUNDING SOURCES

However, all is not lost. The good news is that a wide variety of less well-known funding sources do exist, from specialists such as asset-backed lenders and business cash advancers to crowd funding websites as well as novel sources of funding such as invoice factoring and invoice discounting. Plus, it is reasonable to expect that further sources of funding will emerge as the recently established Local Enterprise Partnerships and Enterprise Zones begin to take shape throughout the UK.

For those seeking loans, the Community Development Finance Institutions (CDFIs) may be a good alternative to the banks. CDFIs lend money to businesses, social enterprises and individuals who struggle to get finance from high street banks and loan companies. Some are even approved to lend under the Enterprise Finance Guarantee, a scheme in which the Government provides a guarantee to the lender, enabling SMEs with insufficient or no security to secure a business loan.

A VARIETY OF INVESTORS

Of course, the more traditional equity investors will continue to play an important role in providing funding sources for businesses in the UK. Indeed, equity investors are particularly active and have provided funding of over £500m into UK companies so far this year. Ranging from venture capital funds to angel investors there are plenty of options for those seeking equity investment for their business. It can seem daunting applying for equity investment, as it requires plenty of time, preparation and practise, and businesses need to ensure that their proposal genuinely has the potential to offer a good return to investors. However, provided it ticks this box and is presented well then investors will be interested and equity investors are often more than willing to support the company through its growth stages, by providing both business and financial support, in order to ensure a good return is achieved.

However, it is worth keeping in mind the other sources of business funding, particularly in these troubled times when the competition for equity funding is high. Look beyond the traditional sources of grants and government-backed funds and towards more novel business funding sources and increase your chances of successfully finding funding.

To learn more about BusinessFunding.co.uk, visit the website via the link or read the GWG's review on the Small Biz Essential Sites channel.

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