The world of debt funding has changed dramatically in recent years and there’s now more choice than ever before, which presents countless opportunities but also means it’s increasingly difficult for businesses to determine which option is most suitable for their individual requirements.
Historically, a business requiring funding would simply approach its bank, and this is still a great starting point. In most cases the bank will know the workings of the business and if they are able to provide the necessary facilities, it will usually be at a competitive rate.
In fact, if the relationship is good, approaching any existing funders is usually the most sensible option, as they are most likely to look favourably on the request. Forging a strong relationship with funders is also important to ensure the business receives the necessary support as it evolves through its lifecycle.
Away from traditional lenders and existing funders, the breadth of business financing options continues to grow. Along with the ‘generalists’, we’re now seeing a plethora of ‘alternative’ banks and ambitious financiers, such as Reward Finance Group, that will often have an appetite for offering bespoke facilities to specific types of businesses or industries.
A big advantage with these types of lenders is that they often have less onerous terms than traditional banks and operate short credit processes, so they offer quick decisions and sometimes the money will be available within 24 hours. Whilst their rates might be slightly higher, some of the more established ‘alternative funders’ are now providing facilities at rates that compete with high street banks.
As a business moves through its various stages of progression, an increasingly diverse range of funding facilities begin to present themselves. Initially finance might be required for asset purchase, cashflow, refinance or consolidation of previously secured facilities, but what might be appropriate funding now, will often change as the business develops.
Utilising the support of a reputable and experienced advisor, with knowledge of both traditional and alternative finance providers, will offer a solid overview of the wider funding landscape. It’s imperative that advisors work in partnership with the business to understand the exact funding requirements for both the short and long term, in order to accurately source and present all potential options.
The best advisors will also have a clear understanding of what a funder is looking for and how to present an application to secure the best deal. In addition, this approach gives the business peace of mind that all possible options have been explored and that it now has the most appropriate facilities in place.
These are all areas that BHP’s Debt Advisory team excels in, and in the last 12 months alone we’ve helped a vast range of businesses, of all shapes and sizes, to fulfil their potential by advising on debt funding worth more than £33million.