Gaining Business Financing in a Tough Economy

Financing your business has become a trial with the economic crisis, but there is help out there.  The UK government has begun to adopt a number of plans to entice small businesses to expand in the next few years into the international market.  A recent study looked at how businesses approach their need for financing.  This study from Close Invoice Finance showed 42 percent of small businesses are looking to their accountant for advice on which banks or lending companies to trust.  30 percent of businesses stated they would ask their bank manager for support, which is 20 percent more than last year.

Currently 1 in 4 small businesses will seek a bank manager for advice.  These small businesses are categorised as having at most 50 people in their employ.  42 percent of the 101 to 250 employee sized businesses will seek advice from banks about the type of loans they require.  Even with the advice of an accountant or bank manager these small businesses are still being turned away.  It seems while the government wants to lend a hand the banks are still largely unresponsive.

This information can help you find the financing you need in looking at what other businesses have tried.  Advice is not really helping the businesses gain the funding and it is perhaps more because of where the business sits.

Banks will not take high risks right now.  Any small business or business looking for a loan has a better chance than most individuals seeking a personal mortgage, but that again does not mean a lot when considering how the banks have changed their parameters.  For a business to receive funding they must be able to prove there is a market for growth in their industry, as well as having the proper business plan, statistics, and application.

The advice that can be offered here is look to your company.  Examine the strengths and weaknesses you see inside your business.  Are there areas of improvement?  Can you save on employee wages, yet retain quality customer service?  Can you find a new vendor offering lower prices for the goods you sell?  Do you have a service business that is needed in the current economy?  Debt management and advice is a hot business right now, but there are also others out there individuals cannot do without.

Re-evaluate your current target audience to see if you can reach a larger audience or a different audience.  It might be time to market to the audience that is spending their income rather than a niche market that is lacking in sales.  By giving your business a stronger foundation to find potential growth a bank or lender is more willing.

There are also some banks willing to lend more than others. Research the bank, as they are researching you.  Check what the financial state of the bank is.  Will your bank be filing for bankruptcy or are they on a good strong path?  The bank that is financially strong is more likely to offer funding.