Securing funding for your business can be hard. Whether you’re looking to expand, acquire or start your own business, the whole process can be overwhelming. Alternative finance providers, MSIF helps us to debunk some common myths around SME funding.
Banks are the only option for a business that requires funding
No, this is not the case. Granted, banks are usually people’s first thought when they think about accessing funding, however, they are not a business’ only option. There are different sources of funding and finance providers who can provide funding for many purposes such as start-up loans, working capital loans, management buyouts etc.
One of MSIF’s own clients, Henry Cookey of HC:Fit Ninja Training, explained “We applied for a bank loan initially but it was very expensive, MSIF were more competitive on price. They also provide much more than money. They have been on hand throughout to help guide me through the investment process and also offer fantastic post investment support.”
Asking for a large amount of money lowers your chances of gaining funding
While the final amount of the loan is a decision factor for lenders, it isn’t the sole point your business proposition is analysed on. Finance providers are looking at whether the amount of money requested fits the stage your business is at, the current needs of the business, and what you will be using the money for. If the funder believes you will be able to make your repayments, a larger amount of money should not hinder your chances of accessing finance.
This is why it’s important to explore every option that may be suitable to you and your business. Some lenders even offer funding gateways, helping businesses to navigate options with potential lenders to help secure investment.
Only businesses that are struggling can/should/need to apply for funding
False! Businesses of any health can apply for finance. People often see a business loan as a negative thing, a product only necessary for a failing business. However, strong and growing businesses often apply for finance too.
Previously, MSIF loaned money to a business as part of an MBI (management buy-in); the business, Delta Rock, was strong, and the management team were ready to retire. Scott Davis used the money loaned, in conjunction with his own funds, to buy the share capital of the business, giving the existing management a route to retirement. Scott is now in place as the Managing Director, the business is successful and still growing.
Investors only invest during the start-up phase of a business
Investors are available at all stages! As explained above, funding is available for any business stage, from start-up investments, loans needed for growth or expansion, or even equity releases, and management buyouts/buy-ins and acquisitions.
If you require funding to make something happen within your business, be sure and confident enough to ask the question. Apprehensive? Not to worry, there are a lot of ‘access to finance’ initiatives – like the MSIF Finance Hub – which can help guide you through the funding process from business plans, to cash forecasts, to application success!
MSIF provides funding to businesses across the North West and North Wales and is backed by the Northern Powerhouse Investment Fund and, the European Regional Development Fund, among others. Follow the link to find out more about MSIF and the MSIF Finance Hub: http://www.msif.co.uk/
Originally published March 12 2019 , updated February 24 2020