Andy Preece, of Armstrong Watson

THERE are a number of reasons why a business may need to borrow money and these can vary widely; from winning a new contract but needing to fund the raw materials and wages before the job is done, to having an opportunity to buy another business or outlet.

Important issues to always consider when borrowing money is ‘can I afford the repayments’, ‘what will this extra money allow me to do?’ and ‘what additional level of profit can I turn this into?’

Sometimes a business may need to borrow for less positive reasons. They may have lost a contract and need to fill the cash flow gap left for a period of time, they may have to replace a vehicle because it has had an accident, or a customer may have gone out of business owing them money.

This does not have to mean that borrowing is wrong. It can be used to provide vital breathing space whilst more business is won to replace what has been lost or while an insurance claim is being resolved.

Bad borrowing is where it does not make sense.

So if a business is looking for borrowing where can they go?

In the current market place there is more choice than ever before, with a continued rise in ‘alternative’ funding options, covering a wide range of non bank options.

The option that is best for a business will depend not just on price but a number of other factors, such as the length of any loan, the level of security a lender may need, the flexibility of the facility and many others.

But with so much choice, how do I know where to get it from? This is where your accountants or a good finance broker can really help, often having access to a much wider variety of choice than a business could themselves. They can help to identify the pros and cons of all options, making sure that the type of funding sourced is not only at the right price but also the most suitable solution for that particular business need.

If you would like to discuss funding options for your business please get in touch with Andy Preece, Commercial Funding Director at Armstrong Watson tel: 01132 211379