Ask the Expert: funding growth

Question:

Our company is experiencing growth pains. HR and IT we can deal with – but obtaining finance to fund growth is challenging. Where are we most likely to get a sympathetic ear? We have eight-years behind us but few physical assets.

Answer:

It’s good to hear your business is doing well but funding growth can be challenging. However, there are several options.

If your business is involved in any sort of research and development, there is a generous tax relief available from HMRC to reduce your corporation tax bill or even obtain a tax refund.  We have successfully obtained this relief for clients helping them fund their company’s future growth. The good news is that it’s free.

Consider too, invoice financing where you receive a percentage of your sales invoices when you raise them and then the balance of the cash when your customer pays.  There is a cost involved in doing this, but it can certainly help with a growing business.

You say your business doesn’t have many physical assets but if, for example, you hold stock, there are lenders that will help by lending money against it.

Most of the banks will also lend money to solid growing businesses too, although with few assets they may require a personal guarantee; consider this carefully.

Another source of funds available to business is the ever-popular crowd funding.  This is where those with money to invest pool it prior to lending to businesses like yourselves for their planned expansion.  The interest rate for such investment can be slightly higher than normal.

One final option, provided they are in the position to do so and you speak to them nicely, is family.  However, ensure they are aware of the risks for if your business fails you may be unable to repay the loan. Make sure they understand that and ensure the agreement is well documented.

For help and advice on business funding, get in touch with our Birmingham Business Advisors.

Haines Watts are accountants in Birmingham providing accounting, tax and business support.