Business Loans – All You Need To Know
There are countless reasons why a business may require a business loan. Historically, the first port of call if business funds were required would be the High Street Banking system, where, more often than not, the company had a business banking facility, often with a pre-arranged overdraft. If additional finances were required for any reason, then a phone call was made to arrange an appointment with the local branch Business Manager and, cap in hand, the case was carefully and nervously made for additional finances. After signing over the family silver, a decision would be made.
This worked very well, especially as many years ago the High Street Banks were interested in business and helping businesses to develop and thrive. However, not too many years ago the High Street Banking pretty much en masse lost their appetitie for funding businesses, with MD’s and Sole Traders having to try a little harder to find sources for business funding.
Why a Business May Need a Business Loan
There are many reasons why a business may have a requirement for a loan. Some are planned and calculated, and some may be pretty much out of the control of the business. Examples of these may include property development or aquisition, which are examples of a planned business funding requirement, or maybe because a major customer has issues settling monthly invoices that were, until recently paid on time. This is a classic example of business funding being urgently required and unplanned, whilst out of the control of the business. Having a ‘facility’ in place that is able to manage the situation in circumstaces such as this is almost a company owner or Directors responsibility, in order to safeguard the future well being of the business.
There is a fundamental difference between development business loans and day to day cash flow requirements that from time to time may only be managed by a short term injection of cash. Efficient cash flow monitoring and forecasting can help a business to plan and is usually a key element of any business development loan, when additional premisies, staff, plant or stock may well make the business more profitable. But cash flow forecasts are not able to foree a business being let down by a customer not being able to pay their invoices in time. This is when alarm bells start to really ring. Specialist finance knowledge may well be required here in order to select the most appropriate business finace to suit requirements, Merchant Cash Advances being a good example. Matching the right business financial product to the circumstances can save much time as money long term, and many of the business finance packages that are available make sense anyway. The Company Director is better to be informed and ready if needed with this information than to be chasing around frantically when his of her company has been let down.
Different Business Finance For Different Circumstances