Supporting your Funding Strategy

Funding for Business Success

As an SME business with ambition, it is critical that you have the right funding strategy in place to help you deliver your short, medium and longer term goals.  Whether you need to improve short-term cashflow by unlocking cash from unpaid invoices, are looking to expand and need to fund new infrastructure projects, or are looking to fund an acquisition or exit strategy, there are a wide range of funding options available. 

Understanding when funding is required, being able to proactively plan for it and knowing which funding options would best meet your needs is where the services of a proactive accountant can really add value.  

Having worked with SME and owner managed businesses for over 20 years, Equifino are perfectly placed to help your business make the right funding decisions.  Ideally working proactively with your business on a retained basis, we can help to identify potential funding gaps and provide guidance on the most appropriate funding options enabling you to make informed decisions that drive your business forward.  Specifically we can;   

Work with you to develop a long term funding strategy to support your business growth plans.
Create Management Accounts to support cashflow management and identify funding gaps.
Provide guidance on different funding strategies and their suitability for your business.
Support your decision making on a specific one off funding project.
Introduce your business to finance providers from out network of trusted partners.

Funding Options

At Equifino we can help your business find the right funding solutions for your needs either directly or through our network of Trusted Partners.  Below are just a few of the types of funding available to businesses.

Asset based lending Asset Finance Invoice Finance

Asset based lending or ABL is a type of funding that enables you to unlock cash that is tied up in your existing business assets.  Existing assets such as stock, plant and machinery or property can be used as security for the loan.  Deals can also often include an Invoice Discounting facility to enable cash to be unlocked from business debtors.

ABL can be used to raise funds between £500k and £50M  based on up to 90% on outstanding invoices, 80% of the market value of plant and machinery, 30% on raw materials held, 50% on finished products and up to 60% on property owned by the business.

Your businesses could use Asset Based Lending to support the following type of activities:

Growth - by freeing up cash locked into assets you will have the cash to to fund and support your growth ambitions whether moving into new markets or funding recruitment.

Mergers and Acquisitions -  this type of funding is commonly used to support these transactions as the assets included within the business being acquired can be used to raise funds.

Management Buyouts - not only helping to fund the purchase of the business by the management team but potentially providing on going working capital. 

Equifino can provide support to understand if using ABL is the right solution for your business funding needs as part of a one off transaction or longer term funding strategy.

Asset Finance is typically used to help fund the purchase of an expensive asset such as large plant / machinery or new IT equipment rather than tie up existing cash reserves.  

There are a number of different mechanisms that your business could use to fund the purchase of such assets;

Finance Lease - you select the assets you are looking to purchase and the finance is provided either directly or indirectly by a finance company.  Your business will pay regular payments over the period of the fixed term (typically 2-5 years) and at the end you have the option to purchase the asset at a nominal amount.  As the business is identified as the owner of the asset from the outset there are considerable tax benefits available.

Hire Purchase - similar to a finance lease, a hire purchase agreement is secured against the asset which is then paid for over a fixed term, usually 3 to 5 years.  It is common for the full VAT to be payable upfront along with a small down payment.  At the end of the term the asset has been purchased in full.

Operating Lease - usually used for large purchases, the lenders will take a residual value in the machinery and so you are not funding the entire cost of the kit.  There are tax advantages for this type of lending and provides "off balance sheet" funding.

Understanding which of the above is the right type of funding option for your asset purchase will depend on your business, costs involved and nature of the asset.

Equifino can provide support to help you understand which is the right funding solution for your business as part of a one off transaction or longer term finding strategy.

Invoice Finance is the umbrella term used to cover Invoice Factoring and Invoice Discounting both of which are mechanisms to help improve business cashflow by releasing cash tied up within unpaid invoices.

Invoice Discounting - a rolling loan facility paying up to 90% of the value of your unpaid invoices.  The lender provides a secured loan against the unpaid invoices and the company retains credit control and all contact with clients around to payment of amounts owed.

Invoice Factoring - the lender purchases up to 90% of the value of outstanding invoices outright from the business and then takes on direct credit control and client management.

Equifino can provide support to help you understand which type of Invoice Finance will best suit your business needs.  We can work with you as a one off project or as part of a wider, more strategic funding strategy.


Frequently Asked Questions

See below just a few of the regularly asked questions about funding options available for businesses.  If you don’t see your question below just get in touch as we’d be happy to help.  Alternatively, take a look at our additional resources in our knowledge hub.

Invoice Discounting and Invoice Factoring are both mechanisms for improving cashflow by releasing funds tied up in unpaid invoices and sit under the umbrella term Invoice Finance. 

With Invoice Discounting the lender is providing a secured loan up to a percentage of the value of outstanding invoices.  The business retains responsibility for credit control and management of the relationships with clients.  Invoicing Factoring on the other hand is where the lender purchases the unpaid invoices outright from the business (releasing cash) and takes on the credit control and client management directly.

Crowdfunding is a way for a business to raise funds to finance a project or the day to day business operation.  It enables the business to collect money from a large group of people using online platforms and is most often used by startup companies or growing businesses as a way of accessing alternative funds potentially when they don't meet the tighter lending criteria of more traditional business funding options. 

Private equity firms raise money from institutional investors (e.g. pension funds, insurance companies) in order to invest in private businesses, growing them and selling them years later.  It is a way for a business to obtain funding for growth at scale for which it gives equity within the business as security for the funding.

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