The options and benefits for businesses considering taking out a Loan, and tips on what to avoid.
Frequently Asked Questions
Business Finance can be a minefield for many. This is particularly so for those starting in business for the first time. We hope that the following list of questions and answers will help your understanding. To be sure that you get the best deal from the right lender, speak to us at Business Finance Services (BFS) on 0800 093 5240.
What types of finance options are available for my business?
The answer will vary according to what your business requires funding for. For example, is it for: asset purchase, working capital, business growth, product development, property purchase, property development, business acquisition etc.?
Thus there may be a number of different options available to your business. These include but are not restricted to:
a. Invoice Finance.
b. Trade Finance.
c. Asset Finance
d. Business Loans (secured or un-secured)
e. Commercial Mortgages.
f. Property Development Finance and Bridging facilities.
g. Equity Investment.
h. Grants & Loans.
To explore these, call us at BFS on 0800 093 5240 for a free consultationand we will be delighted to discuss the reason for your funding need and will be pleased to confirm the type of funding best suited to your business requirements.
How do I know if my business is eligible for finance?
Firstly you need to identify the type of funding your business needs. Once you/we have established this, then eligibility criteria can be determined. Following this, it will be necessary to provide the information required by Lenders before your question can be fully answered. Again call us at BFS to establish eligibility.
How long does it typically take to get approval for financing the business?
This will vary depending on the type of lending you need and, in some cases, the Lender.
It can vary from hours to weeks or months. There is no ‘typical’. However, it can take longer for the money to be available depending on requirements such as valuations and security documentation.
What kind of interest rates can I expect for any finance?
Interest rates will depend on the type of finance you are applying for, and the lender’s perception of risk and security. Good credit low risk funding could be as low as 1% over bank base rate with high risk lending rates can going over 30% pa.
Best to discuss with BFS at the time of application.
Can I get finance even if my business has poor credit? How much financing can I apply for?
Impossible to say without an initial discussion. It is not out of the question, however, particularly if there is additional security available over and above that provided through the business. So give us a call at BFS on 0800 093 5240 or follow this link to our Enquiry Form.
What kind of financial documentation do I need to provide when applying for finance?
This will vary depending on the type of finance being applied for.
- Businesses with good credit may get facilities approved by completing a simple online application process.
- Others may require a copy of latest filed and management accounts, financial forecasts , debtors and creditors including HMRC debt, and bank statements.
- Details and copies of other existing funding arrangements may be required.
- Evidence in terms of property valuations for property or assets if the funding is required to purchase either.
- Proof of any security you can provide against loans may well also be needed.
- Proof of authority to transact the deal on behalf of the company (Borrower).
What happens if I miss a payment on my financing?
Are there Fees associated with getting finance?
Yes, and this could be either:
a] arrangement or set-up fees charged by the lender.
b] where a finance broker receives a commission from the Funder they are unlikely to charge their client an extra fee.
c] where a broker does not receive commission they will most probably charge a ‘success’ fee as a percentage of the amount of finance raised .
What is Invoice Finance?
This is a type of finance that enables you to raise working capital for the business immediately upon raising an invoice(s) rather than having to wait for that invoice to be paid. There are a wide range of invoice finance options available these days. In simple terms these can be broken down into:
– Factoring (in various forms).
– Invoice Discounting (again in various forms).
– CHOCS (Customer Handles Own Collections)
Invoice finance facilities contain many different terms and conditions. These can impact on the initial advances received from the facility. It is advisable to use a Broker such as Business Finance Services to make sure you get the facility best suited to your businesses requirements.
How does it work?
Invoice finance is simply the assignment (or sale) of an invoice in exchange for having access to an agreed prepayment percentage of the invoice with any balance being paid when the customer pays the invoice finance company or a nominated trust bank account.
Factoring facilities will include debtor collection services including statements, dunning procedures and telephone credit control.
Invoice discounting leaves the day-to-day credit control with the client
What are the benefits of invoice finance for my business??
Invoice finance is a fantastic way of generating cash flow for your growing business. This assumes that you raise invoices that meet the ‘approval criteria’ of the invoice finance company.
The most basic of these criteria are that any goods are ‘sell and forget’ and service invoices are raised AFTER the service has been provided.
It may not benefit many types of business where invoicing does not meet these criteria.
What type of business are most suitable for invoice finance?
For growing businesses who provide credit to good customers, invoice finance can be a very useful facility as it should grow as the businesses’ sales grow. However, it is not suitable for every type of business and with so many options in terms of facility types it is important to choose the one that works best.
Factoring traditionally has been the entry-level invoice finance facility for new-start companies but the advent of online fintech offerings has certainly not only widened choice but has also confused matters when it comes to selecting the most appropriate facility
Confidential invoice discounting involves the client retaining control of the invoice-collection processes and receipt of the funds is extremely difficult for a new-start business to obtain unless there are compelling reasons such as additional security.
Some forms of invoice finance are tailored to specialist sectors like construction, finance and recruitment. For more details on these options contact us at BFS.
How quickly can I receive funding through invoice finance?
This may vary from Lender to Lender but normally, once the initial administration has been completed, within a matter of a day or two of the invoice being issued.