The first Bank of England interest rate rise in a decade will have come as an unpleasant surprise to many small businesses – and with base rate still at a remarkable low of 0.50%, there could be more to come. Equally worryingly, more than 56,000 small businesses in the UK are set to face significant business rate rises next year, which could be enough to push many over the edge.
Perverse though it may sound, could taking out additional borrowing be the answer? It’s certainly true that having a cash cushion on hand to deal with sudden cash flow crises is an extremely good move, even if you will now have to pay a higher interest rate for the privilege. But what are your options when it comes to small business finance?
Credit card
You could turn to your corporate credit cards, which offer the ultimate in flexibility – but at a high price. You should also bear in mind that running your credit cards up to the maximum can have a small but significant impact on your credit score, as it’s generally a red flag indicating that a company has run into trouble.
Bank loan
When many businesses think about borrowing, their minds immediately turn to a traditional bank loan. However, following the financial crash of 2008, banks have significantly tightened their lending criteria, making acceptance difficult.
Even if you have an excellent credit score, giving you a high chance of acceptance, the application process can prove excessive, requiring a mountain of paperwork.
Asset-based finance
Alternative lenders like Cashsolv have completely different acceptance criteria: we’re more interested in your company’s prospects and the collateral it can offer. With asset-based finance, you can borrow against the value of your plant, premises or equipment – and because the loan is secured, the interest rate will be reduced.
Invoice finance
Alternatively, invoice finance through factoring or discounting can tame a troublesome cash flow forever. With these innovative solutions, we can lend you up to 85% of the value of your invoices – the instant you issue them.
Repayment is made when your customers pay you, and with factoring we can even take over your accounts receivable function and assign experienced credit control professionals to secure early repayment, thus minimising the interest you pay.
Alternatively, if you prefer that your customers deal directly with you rather than a third party, you can opt for invoice discounting.
Emergency loan
If you don’t plan ahead and the worst comes to the worst, we can save the day with an emergency loan. You can be sure that we’ll act quickly – we can have the funds inside your account within 24 hours, so your bills will get paid and your company will stay in business.
Cashsolv are the specialists in small business finance, and we can ensure that a small interest rate rise doesn’t become a huge problem for you. To discover what we can do, please contact us.
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