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THE ART OF FUNDING
THE ART OF FUNDING
Leadership Project need financing for a variety of purposes, but there are some common reasons why they are looking for financing.
The reasons may include subsidies and loans to companies for working capital, the purchase of machinery, hiring more staff or even refinancing existing loans to reduce monthly costs. A UK Merchant Bank survey published in 2019 found that 44% of SMEs had applied for some form of external financing in the previous three years. Read on to find out the 5 most common reasons why most companies apply for financing.
Sufficient working capital is a key aspect of the financial health of any business, and not having enough working capital can have a serious impact on the future of your business. Many companies choose to seek external financing to create sufficient working capital to meet their growth ambitions. A loan can cover short-term financing needs while giving the company the money it needs to grow, or it can bridge the gap between customer orders and supplier payments to help the company meet its financing obligations.
Working capital financing can also allow your company to take advantage of new opportunities that arise, investing in new products or services to allow you to expand. Working capital loans can provide a useful “cushion” for your business if you need a little extra money – you will know that your daily running costs are covered by a loan, so you will have the funds available to cover unforeseen costs. Seasonal companies can benefit from working capital during their quieter periods to cover their basic expenses.
The growth of your business and the increase in sales often force you to buy assets such as machinery or new vehicles. Although you have enough money to cover the working capital expenses of your business, you can look for a loan to cover the purchase of new assets in order to allow your business to grow. An asset finance loan is a great way to spread out the costs of acquiring an expensive new asset. Fixed monthly repayments and loan terms from 6 months to 5 years can help you plan your cash flow in advance so that you can make the most of your growth opportunity.
An asset purchase loan can be used to purchase different things for your business, depending on what you need to meet your expansion plans. The funds can be used for commercial vehicles, whether you are looking to purchase your company’s first vehicle or want to increase capacity by adding to your existing fleet. You can also use a loan to buy office and computer equipment to ensure that your staff has everything you need to expand the business, or new machines to allow you to manufacture new products or increase production while spreading costs rather than paying a large amount in advance.
Create a business
Startups that are still in the startup stage will need financing to take off, and a good cash flow is essential for a small business. While most of the directors will use their own funds to start the business, very few manage to completely self-finance to make the business profitable and will therefore have to look for external financing. There are a variety of options for external start-up financing, including bank loans, loans to family and friends, business angel capital investment, crowdfunding and financing grants. A business start-up loan can be used for everything from buying shares to marketing to hiring staff, but start-up financing can be difficult to obtain and many traditional financing providers will need a lot of information, such as a detailed business plan.
If you are looking to grow your business to take it to the next level, you may need funds to allow you to execute your business plans. Whether you want to increase your sales, expand your product or service range, move to new facilities, hire more staff or expand internationally, a loan for growth financing can help you. No matter how you plan to grow your business, growth financing tailored to your business can help you seize new opportunities and realize your ambitions. If the day-to-day running costs of your business are covered, external financing may be the solution you need to grow. Many of these loans will have fixed monthly repayments over the life of the loan, making it easier for you to plan your company’s finances as it grows.
If you need to restructure your corporate debt, a loan that consolidates your loans and reduces costs can make your finances easier for your company to manage. A loan to restructure your existing debt can make financial planning easier by reducing the number of monthly repayments you need to track, and could potentially reduce the total of your monthly repayments. Refinancing your company’s existing debt can help your business grow by freeing up money in your business for working capital and expansion.
How to know when you will have a cash deficit
Are you looking to plan when you might need to apply for business financing? Check out Floating Cash Flow Forecast for easy-to-use and always up-to-date software that keeps your cash flow forecasts automatically updated with what’s really going on in your business. Using scenario planning, you can plan for the coming months and see the cash gaps before they occur.
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