Finance Blog


Options for Funding Your SME

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Funding a business can be a tricky and time consuming process. With a multitude of financial factors to consider, it may come as no surprise that many statistics are gloomy about a business’s prospects. This post will give a short introduction to some of the financing options available to SME owners.

Secondary Income

Having a secondary income to supplement your business is not necessarily as hard work as you may think. Many people now make money from home (some even make a living) from trading on global markets. This could include trading commodities like gold or oil, or currency, trading forex with/becoming a partner of brokers like FxPro.

You could also do some freelancing if you have a particular skill which you can utilise, as this type of work offers absolute flexibility to work as and when you wish. Anything which brings in more money will help you invest in your business. Just don’t let it detract from running the business itself.

Asset Financing

This type of funding comes in the form of a loan, and involves securing an asset against the loan in order to receive it immediately. The main difference with this loan compared to other loans is that the asset which serves as collateral is usually already owned by the company.

This could range from a car to a building, and is of particular value when cashflow problems are encountered within the business. It allows assets to be put to good use, and can help your business to run as smooth as possible should you need more direct funding.

Invoice Factoring

This final type of financing may not apply to all business owners, but is useful nonetheless. If your business involves invoicing customers for work done, invoice factoring can help speed up the cashflow of your business greatly. It involves selling the invoice to a third party (the factor) to receive most of the payment (around 80%) immediately.

The factor will then pay the rest (having deducted their charge) once the customer has paid the invoice, essentially removing the uncertain duration between customer payments. Using this service will prevent your business grinding to a halt should invoices begin to stack up.

These few business financing options should help you along the way when considering the various options you have for funding your SME. Look into which you may want/need to use and factor them into your business plan if needed.

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