How can finance help a small business grow?

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Business owners are constantly looking for ways to ensure that their companies grow and expand on the market. Sustainable levels of growth can lead to great benefits including protected levels of longevity. But how can companies achieve this goal? While there are a number of options to consider, the best possibility is usually going to be the right form of financing. Let’s explore why financing is a crucial way that SMEs can grow beyond their current size.

How You Can Use Finance

Once you access the finance that your business needs, there is a range of ways that it can be used. In doing so, you will be able to ensure that you see gains in your customer base. You will also be able to invest in innovative solutions that quickly separate you from the competition. Using alternative finance, you may also be able to access the funding you need for mergers or key acquisitions.

Physical expansions may be available as well. This is one of the clearest signs of business growth and a great way to attract new investors. Whether it’s through the purchase of new warehouses or offices, it is strong evidence that your business is witnessing fantastic levels of success. In some cases, this type of expansion may be necessary due to a surprising and unexpected surge in demand for your products. The right finance stream will always be necessary to ensure that you can make these key purchases or pay for the first months of rent.

The right financing solution will also put you in the right position to effectively explore new markets and ensure that you are able to reach a greater level of customers. If you have a limited level of resources financing will be essential to ensure that you can set up a marketing campaign that is guaranteed to attract the right attention.

New Models

Don’t forget, that there are now fresh models that are highly favoured by small businesses. The platforms allow businesses to expand at a rapid pace, while greatly limiting levels of risk. This includes crowdfunding and peers to peer lending models. There are lots of platforms available that provide this possibility. While it will not be suitable for every SME on the market it is certainly an option worth exploring.

The Importance Of Asset Based Finance

According to research by Close Brothers, only 16% of SMEs describe asset-based finance as their ideal form. Instead, it seems that the majority of small businesses are pursuing finance in more traditional forms. This includes overdrafts and bank loans. While these can be useful, there are a few reasons why asset-based finance could be more beneficial for small businesses.

First, it’s true to say that many small businesses are rejected for traditional finance solutions. In other cases, a company is faced with an expensive and impossible to manage high-interest rate for finance.

Many businesses are also in a prime position for asset-based finance. According to research 69% of SMEs that have an annual turnover of £10 million will have cash invested in property and stock. This is the perfect situation because it means that they can unlock a high level of liquidity.

Furthermore, businesses and particularly small companies can have problems with their finances fluctuating. Asset-based finance can provide the right level of protection for this issue with everything from machinery to intellectual property worth considering. This ensures that financing is more accessible and indeed more affordable.

This form of finance may also track growth for a business. So,  the availability of the option grows with the company. It is also increasingly accessible to a wide variety of businesses and this is largely due to new technology as well as new sophisticated levels of data analysis. Gaining asset-based finance is also not typically contingent on a positive credit score which many SMEs will not have.

Alternate Forms Of Finance

There are a variety of different options for finance that a business can consider when exploring ways to fund growth. Investment finance can be a possibility if you have cash saved or particular investments that are available to sell. You may want to consider taking out a mortgage on a particular property that you own to fund the growth of your business. You could also look at outside investors. However, this possibility will usually only be available if you have a strong business plan and a firm track record of achievements in previous financial investments on the market.

As you can see, there are huge benefits available for small businesses that approach financing the right way.

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