From time to time we all need a little financial support . There are options businesses should consider.

Overdraft facilities can be very useful for short term borrowing. These can provide a cushion “just in case”, but certainly not recommended for longer term borrowing as interest rates and charges are usually quite high.

Business loans can be a more structured way to borrow money over a period of time. Quite often you would apply to your bank for a loan, who would make their own assessment of your creditworthiness. These loans, can be useful for more general purposes, however your bank will need to satisfy themselves that you would be able to repay the loan and the purpose of the funds. If you operate your business through a company then banks may also ask for personal guarantees, meaning you will be personally liable for the debt.

Asset finance comes in various guises, from Hire Purchase, Leasing (renting), specific loans from other providers (not banks) all of which have their merits. Lenders tend to be more agreeable to asset financing as there is then a form of security against the debt. The basic difference to consider here would be the desire to own the asset, or rent. Both have different implications for tax relief which should be discussed with your accountant.  There are specialist lenders outside of banks who also lend against assets.

Invoice factoring is an option for businesses who suffer from slow paying customers, this is where a third party advance you money against the value of your debtors, aiding short term cashflow. This can be particularly helpful if you have large amounts tied up in debtors.

All of the above do, of course, come at a cost, but do remember, banks are not the only option.