Business Funding-Becoming More Creative to Raise Business Finance
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Business funding was an area of running your business that was easy to take for granted, when banks were happily providing credit to their clients. For much of the last decade, growth prospects were good, credit lines were easily established, and your relationship with your bank's account manager pretty amicable. Credit flowed, and the idea that it could be 'crunched' very left field.
Sadly though, today's reality is very far from those halcyon days. Not only is business funding still hard to come by, and the bank manager's door apparently a revolving one, but the economic picture is far from clear. Investments, and margins, have picked up from the cut throat days of the last two years, but there is a lingering uncertainty about the future prospects of the economy.
And such big economic questions continue to have a very real impact on your bottom line, and your ability to raise business funding. For the finance manager of a small or medium sized enterprise, it is forcing a more creative outlook to where to source business funds.
Some companies have turned to the asset base lending (ABL) sector to help with their business funding requirements. These lenders look to provide business funding on better terms by securing it on assets of the borrower. One such asset is the future cash flows implicit in your invoices, and ABL lenders can take one of two approaches to enable business funding against invoices.
Firstly they can offer to take invoice handling entirely off your hands, and act as factors- they will become responsible for dealing with invoices and will receive payments from your customers. In return they will advance a percentage of the outstanding invoices. This can give you a substantial boost to your business funding, and help negate cash flow shortfalls. But you will hand much of the responsibility of dealing with your customers to a third party, you will lose a margin from your profits to the fees charged by the factor, and the whole process can be difficult to set up, and terminate.
Secondly they can offer you invoice discounting. You remain in charge of the invoicing and sales ledger, but the ABL lender will advance a sum based on your outstanding sales ledger. You will pay interest, fees, and commit to pay back any net increase in invoice settlements that reduces the debt owed by customers. Again you gain a big cash injection to shore up your business funding, but again you will pay handsomely for the privilege. In addition the lender usually performs stringent credit checking requirements before entering into such an arrangement.
There is, fortunately, another asset that holds a simpler way forward without getting entangled in complex and expensive ABL agreements; your business property.
If you can realise it's value in a sale, but still retain it for your operations, you could quickly sort out a sure and cheap source of business funding. This is where SellMyCommercialProperty can help. We are a team of expert professionals in commercial property, backed by significant investment funds. This enables us to undertake, quicker than you may think, a sell and rent back arrangement with you. You receive funds equal to the fair market value of your premises, and your tenure is guaranteed by a long term lease.
This is a quick and simple process and since you will be dealing with SellMyCommercialProperty directly, there is no need to involve agents.
Get in touch with one of the team at SellMyCommercialProperty, and we will get back with information on how your property assets can provide you with the business funding you need.
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