Most businesses need to raise finance at some point, whether to support expansion, take on additional staff or ease demands on cashflow. With the current political uncertainty looking set to continue and potentially turbulent times ahead, businesses understandably need reassurance that they will be able to access suitable finance in order to reach their full potential, if and when the need arises.
In October this year, the Government demonstrated its commitment to supporting small businesses in the UK by launching The SME Finance Charter , encouraging pledges from UK banks and finance providers to show how they will support their small and medium sized business (SME) customers through Brexit. Lenders promise to support applications, treat all customers fairly and work with the British Business Bank to signpost other finance options in the event of an application being declined.
As accountants, we can help guide you through the options best suited to support your business development, who to approach and how to prepare the documents required for the application. You might be interested to know that businesses applying for finance with guidance from their accountant are four times more likely to successfully receive funding.
What funding options do small businesses have available to them?
Types of finance available to an SME can be broadly broken down into two areas:
Debt – Think traditional bank loans or overdrafts, borrowing money to be repaid.
Equity – This could be raising money via investors or by selling shares in the company.
The need for SMEs to have more access to funding options has resulted in the explosion of the alternative finance market, now worth over £6.2bn in the UK , offering greater flexibility such as peer-to-peer lending, crowdfunding and invoice finance. Although once regarded as a last resort, invoice finance has made a resurgence in recent years, with 36 per cent of respondents from a recent survey of SME accountants saying they would recommend an invoice finance provider ahead of a business loan.
Although having this multitude of choice available is fantastic, for a small business navigating the variety of finance options it can be overwhelming and time consuming.
How your accountant can help
Enjoying an open, collaborative relationship with your accountant means they understand your specific business needs and the associated challenges you are facing as a business owner. You should look to your accountant for advice not just on tax returns and compliance, but also for counsel on finding the best type of business finance to suit your requirements. As regulated business advisors, accountants are well positioned to signpost relevant funding that will strengthen your business.
With banks closing their high street branches and traditional funding often hard to obtain, not to mention an ever-increasing pressure on time for small business owners, your accountant could begin to take on a role similar to that of your bank manager. With working knowledge of the business finance landscape and access to the technology to improve the application process, accountants can facilitate successful introductions between funding sources and SMEs.
SMEs are the backbone of the British economy and securing finance is crucial to their survival. Whilst the threat of an application being declined by the bank may be off-putting, exploring options and compiling the necessary financial information in conjunction with your accountant should improve the likelihood of your application being successful.
We believe that providing a service such as this for our clients is not just ‘added value’, but an essential and necessary part of the varied advisory role that an accountant should play in their client’s business.
Looking for business finance? Get in touch today to find out how we could help your application be a success.
