Member Article

Investing in your business – the funding options available

Paul Evans, area director for SME Banking in Central London, Lloyds Bank Commercial Banking

SMEs are one of the main drivers behind the British economy and Small Business Advice Week is a great way to raise awareness of their importance to economic growth and sustained recovery.

With the recovery now in full swing and interest rates remaining at a low level, now is an ideal time to look at funding investment in your business. Whether you’re looking to expand into new markets or increase your production capabilities, there are a number of finance packages that can be tailored to best suit your firm’s needs.

Some of the options available include alternative finance such as peer-to-peer lending as well as more traditional funding methods. We find that for many small businesses bank funding holds great appeal, both because of the number of specialist finance products now available, and because of the market expertise that bank relationship managers hold.

In my view, such experience is invaluable to growing firms. Dedicated relationship managers are well connected locally and incredibly knowledgeable about the opportunities for, and challenges facing, Britain’s small businesses. Certainly at Lloyds Bank, these individuals play an important role in the strategic development of the companies we partner with.

Supporting international growth

Our latest Business in Britain report for Central London shows that over half of small to medium sized firms in the city expect exports to increase in the next six months.

It’s vital that firms recognise the growth opportunities offered by trading internationally and, for lenders, championing businesses looking to begin trading overseas is extremely important in enabling them to expand and target new markets.

For businesses looking to fulfil opportunities overseas, specially designed trade finance can help support different stages of international growth. For instance, if an order is received from an international buyer, we can provide the working capital to help produce and ship the goods.

There are also facilities whereby payment can be advanced to a business from the bank, so that it doesn’t have to wait unnecessarily for customer payment. This is particularly useful when dealing with firms overseas where there may be a delay on payment processing.

Improving cash flow

Cash flow is a key indicator of financial health and unlocking cash to invest is something all small firms should look at. However, with cash often tied up in assets or used to optimise working capital, growth plans can seem difficult to fulfil. With this in mind, a range of asset based lending facilities are available to firms looking for a cash injection, allowing them to borrow money against the value of their current assets.

Similarly late payments can often be the cause of cash flow issues, so to help buffer the effects of this, an invoice discounting facility can be an ideal option. This allows firms to borrow money against unpaid invoices to bridge the gap between payments and generate much needed working capital.

Sector-specific finance

An advantage of bank funding is that there are a range of options available, rather than just a one-fits-all offering.

To give an example, we recognise that the manufacturing industry is an important part of the UK’s economic recovery, so we offer funding packages that are specially designed to support the sector.

For manufacturing businesses that have to part with large amounts of capital to invest in machinery, hire purchase products allow the cost of a particular purchase to be spread over an agreed period of time, instead of having to make a large one-off payment.

Small Business Advice Week couldn’t come at a more appropriate time when the summer is drawing to a close and people are thinking about what else they want to achieve before the end of the year. Whatever your business’s situation, whether planning to invest in additional assets, increase export activity, or improve cash flow, you should explore the many different funding options out there and grab opportunities with both hands. Through this, we can cement firm foundations for a sustained and robust economic future.

This was posted in Bdaily's Members' News section by Lloyds Bank Commercial Banking .