Top tips for securing funding

According to a recent Nesta report, alternative finance platforms accounted for a whopping £1.2 billion in SME lending and investment in the first three quarters of 2014. With UK businesses clearly ripe for funding, and not necessarily catered for by traditional lenders, it’s important that SMEs understand this new funding landscape and how to get the best option for them, with so many new lending options available on the market.

Whatever the reason for seeking funding, the journey can be smooth and funding can be secured that fits the business needs.  We recently looked into our data of SMEs seeking funding through Fundbird.co.uk and found that there were a whole host of reasons for looking for funding, there are varying requirements and considerations when it comes to amount of finance sought. For instance; 36% using the site are doing so to fuel “expansion and growth”, 15% are doing so to purchase inventory and assets, 21% are looking to improve cash flow and 4% are looking to refinance debt.

So how can SMEs ensure they secure the best type of funding, minus the time, confusion and frustration associated with approaching traditional lenders?

Plan meticulously
It may sound obvious, but SME owners cannot afford to underestimate the importance of having a solid grip on their numbers and requirements right at the beginning of the financing process. Working out exactly how much you need to borrow, and how much you can afford to pay back within a defined timeframe will start you off on the right path. If you already have a solid business plan in place, this will go a long way to helping you prepare financially, and will give you a good idea of how much you actually require.

It is also a wise idea to have a very concrete idea of where this money will go. The increase in the number of alternative finance options out there is great news for SMEs, though as the market has expanded, offerings have become increasingly niche. For example, MarketInvoice, as the name would suggest, specialises in providing funding for businesses facing invoicing problems. This can make it difficult for SMEs, who are already time poor, to invest the necessary resource in identifying the pros and cons of each, and the right fit for their needs.

Get your documents in line
Another “must have” when seeking finance, is your financial documents. Whilst alternative finance platforms are regularly praised for not being as restrictive as banks in terms of the multiple forms, face to face meetings and extensive background checks required, they will still expect to know about your business’s financial standing.

As a starting point, you should consider your monthly revenues, how many sales you process and how many credit card transactions you make. In addition, you should expect your finance provider to want to see bank statements, VAT returns and company accounts. If you’re in the habit of storing these away already, this will be no trouble. If not, make sure you start doing so.

Honesty is key
Whilst alternative finance platforms are certainly opening many doors for SMEs, don’t aim for the unreachable. Be open and realistic about what you are able to commit to, and what you can financially manage. This is where a solid business plan is, again, gold dust. If you know your outgoings, and when in the year you might have to commit to more expenditure, you should have no problems in taking a loan that you can comfortably pay off each month, with no added stress.

Don’t make rash decisions
As with any important business decision, you must take a measured approach when looking to secure funding. With a plethora of options, it can be difficult not to become a kid in a candy store. Don’t forget that it has become a competitive market, so make sure you check through your options with an intermediary. That’s where Fundbird comes into play – Fundbird provides SMEs with a pre-filtered selection of lenders, to match them with the best finance provider for their needs. We work with UK’s top lending sources – including alternative lenders such as marketinvoice, iwoca, fleximize and more.

At Fundbird we know business owners don’t have the time or resources to spend hours trying to understand the ever expanding range of funding options on the market. We’ve made the process simple and quick – to enable business owners to find the funding they needs for their business.