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New business finance: an overview

Despite government initiatives and financial protection recently put in place, high street banks are still fairly reluctant to lend money to young businesses; which is a great shame and could well be hindering any economic recovery.

Business finances at the very beginning

There are many valid reasons for needing a business loan, especially during its embryonic stages. Business development is not just very complicated, time consuming and sometimes frustrating – it can be remarkably expensive. Securing patents, building a brand image, marketing that image and the initial stages of implementing services or products are the biggest and most difficult periods for any business.

It is often said that the first two years either make or break a business but like any genuine over-used cliché, there is more than just a grain of truth in it. Even once the business is up and running it often takes time, sometimes years, to establish a wide enough customer base to push the company up into the realms of being profit making.

It is often at this stage of development that a young business will need even a short-term cash injection most.

Obtaining financial aid

When trying to source a loan for a young business it is common for the entrepreneur to have to put their home up as collateral. Some people, especially those with young families, are understandably reluctant to do that whilst other people might still be in a position whereby they are living in rented accommodation. Other people might have already placed their home up as collateral on a loan already.

Lender Escrow is a good way of providing collateral by the way of securing a loan against intellectual property. Parting with any intellectual property under any circumstance can be a nail biting experience, as it is essentially the very beating heart of your business.

However, M&A Escrow provides a great way not just of assessing the value of your intellectual property but of safeguarding it against misuse or exploitation when it is necessary for that information to be held outside of your company’s location. Un-nerving though it might initially sound, providing a third party with your most highly prized and confidential company secrets, when done properly with the correct procedures in place, is not as perilous as it might sound.

Many companies for the sake of their intranet, website or functional business software will employ an outside company to develop software for them. This invariably involves information that is commercially sensitive and must not get into the wrong hands. Software Escrow provides that security by putting in place end user agreements that in the event of the third party going into liquidation, or simply disappearing keeps all of your business’ information safe. This is one of the easiest ways to obtain aid with factors which affect business finances but is not always given the attention it deserves.

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