With so many small business funding options out there and numerous providers, how do you choose the right option and how do you ensure you’re getting the best value from your lender? Find out in this guide.
Types of small business funding
There are a range of funding options available for small businesses that can help with new equipment purchases, entering new markets or growing your business. These range from government funded grants and schemes, to leasing agreements, business loans and overdrafts.
Each of these small business funding options has various advantages and disadvantages. Business loans can be great for funding certain assets, but may not cover the whole purchase cost. Business overdrafts can be flexible and easy to arrange, but you may miss out on the best offers if you don’t want to move your current account.
How to find a small business funding provider
When seeking external funding for your small business or start-up, it’s vital that you do your due diligence. You want to see some assurances that the lender is as honest, transparent and trustworthy as they claim to be. But what do you need to be on the lookout for?
Look for official affiliations
You want to see that the small business funding provider is affiliated with all the right third-parties – one of which should include the Financial Conduct Authority (FCA), the financial regulator in the UK that authorises which firms are allowed to provide financial services or products.
The FCA keeps the Financial Services Register, a public record that shows details of firms, individuals and other bodies that are, or have been, regulated by the Prudential Regulation Authority (PRA) and/or the FCA. For example, if you were to search for Shire Leasing, you would find an ‘Authorised’ status with “permission to provide regulated products and services”.
Other affiliations might include the Finance and Leasing Association (FLA) – the leading trade association (and the largest in Europe) for the UK consumer credit, motor finance and asset finance sectors – and the government-owned British Business Bank (BBB), which aims to increase the supply of credit to SMEs, as well as providing business advice and support services.
Shire Leasing PLC is financially supported by the BBB. In 2015, the BBB matched Shire’s private funders and invested an additional £40 million into the organisation.
In addition to this, Shire Leasing has an own book value of over £115 million to further inject into British SMEs.
Read some testimonials
What are customers of the small business funding provider saying about their experience with them? In an ideal world, you’ll find a testimonial or two from a customer who operates in the same sector as you do – but that’s not essential.
Finance firms know how important it is to prospective customers to see testimonials – one study found that when asked how important reading online reviews was before purchasing a product, 38% of respondents answered “very important” and 19% responded “extremely important”. So, if you can’t find any, the alarm bells should be ringing.
Shire Leasing has a number of testimonials across several sectors, from catering to scaffolding. It just goes to show that we have an appetite to fund almost anything business-related.
Check out the history
How old is the small business funding provider? If they’ve only been operating for a short time, they’re not going to have much of a track record of lending or leasing.
While a company shouldn’t be judged on age alone, it’s hard to escape the sense that you feel like you’re in safer hands when you’re dealing with a more established small business funding provider.
Perhaps they’ve won an award or two in that time, adding some credence to their claims about their innovation or excellence. It’s all about building a picture of the company in question, helping to provide some peace of mind that you’re partnering with the right small business funding provider.
If we’ve passed the due diligence test or if you’d like to find out more about how we operate, give us a call on 01827 302 066.