Support Your Cash Position for Growth
Friday, December 31st, 2010As the new year starts enterprises should be budgeting for growth irrelevant of whether they have a value added tax bill due in January. Do not let VAT slow your plans for growth. Small business loans can be taken out to spread the payment across the year and you can keep today’s cashflow to drive growth. The question then is which form of business funding is best for you?
The common perception now is that business finance has become more difficult to obtain since the financial crisis. Banks are reducing the number of unsecured loans and are promoting secured loans so there is an element of truth to this. If you do not want to secure the loan on your residential property then you should put yourself in the best position to obtain an unsecured loan.
Paying your loan back with a monthly timetable is the best way to spread your cashflow and means you pay less interest as the outstanding loan amount falls over time. On the other hand, you can delay the whole tax bill with a bullet loan but this will not help your cashflow and could compound the problem next year. This adds to the cost as well.
If you can demonstrate a stable cash position through your cash position using management information then you should be able to get access to affordable finance. Interest rates charged by banks are high and you may do better looking to new alternatives such as social lending to firms.
Social lending players tend to restrict themselves to robust businesses. If you are deemed sufficiently creditworthy then you will be able to get access to an unsecured monthly repayment loan more quickly than through a bank and it’s also likely to be lower cost. The best advice is to get a range of quotes and choose the best option for you.