Financing your business growth

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John Ellmore, from knowyourmoney discusses the finance options available for SME’s, what you need to do before applying and the options open to you.

Financing your business growth

When it comes to sourcing funding, businesses will need to carefully research and consider the different possibilities. Because there are so many finance providers to choose from, and different platforms within these groups, it is easy for businesses to feel uncertain about which one would be best suited to their requirements and circumstances.

Whether you’re a relatively new enterprise or a fairly established SME with aims of expansion and growth, finding the right finance can help you to achieve your business goals. But what do you need to do before applying, and what are the options open to you?


Preparing for a business finance application

Before applying for a business loan, it is important to be clear what you plan to do with the extra funding and how this will help you achieve your business goals. Creating a comprehensive business plan would be the most useful way to proceed as this would clarify how much funding you need and what you would use it for, as well as showing how you would then make the repayments in the future. Several finance providers may require a business plan detailing this information as part of their application process, so it is good for businesses to have this ready in case it is asked for.

Business owners may also find it useful to check their credit score- both of the business and maybe even their personal rating. As your score is one way that lenders determine your creditworthiness, it is a good idea to check this is healthy and will help your application, not hinder it.

Depending on which lender you go for, businesses may also need to gather documents showing their financial history. It may be possible to automatically share some of this information online (if businesses use a digital lender), but otherwise they may need to manually find and show their bank statements, transaction history, and business accounts to a potential lender.

Once you have gathered the relevant documents and have a good idea of the funding you need, you will then need to look into which finance provider will be able to best cater for your needs. Some of the possible funding sources are listed below.


Online lenders

With the recent proliferation of peer-to-peer providers and other fintech lenders, businesses now have an even wider range of funding options to choose from. These providers all have different features and can often provide flexible lending amounts, which may suit the needs of certain small businesses. The application process for these lenders is also fast and fairly straightforward as everything is completed online. Lenders can access the complete financial history of the business and assess it using advanced algorithms, using this data to decide on the viability of lending to a company


High-street banks

Traditionally, big-name banks were the only real options for businesses wanting to take out a loan. Although there is now a greater variety of funding options, for some SMEs a bank may still be the best choice, especially if they are fairly well established and are looking to borrow a significant sum of money. Banks are able to offer loans at competitive rates, but they are also more risk-averse, which could result in large numbers of start-ups and SMEs having their applications rejected



Especially if you are just starting out on your business journey, it may be difficult to determine which funding provider is best for you. This is where a broker may come in handy as they can offer advice and guidance on which lender to choose, help you find special deals, and assist you with the application process. Businesses should, however, be aware of how the broker receives payment and how much this could affect their suggestions.


Government loans and grants

It may also be worth looking at national and regional government-backed loans and grants. Although the competition for them is likely to be fairly considerable, there are many different funds available for certain regions, industries, and start-ups in general. These can range hugely in value, from a few hundred pounds to tens of thousands of pounds, which can help numerous businesses achieve certain expansion goals.


Other options

There are a number of other ways that can help businesses release funds and find money in order to expand. For example, invoice financing and asset financing are slightly different forms of borrowing to those listed above as they are ways of releasing funds that a business already has (in its unpaid invoices and equipment etc.) Although they won’t be suitable options for every business, they can nevertheless be possible routes to accessing money at a specific time.

Investment may be another possible route to consider. However, this is a big decision to make and there are a number of different ways to invest, so business owners should carefully research if any of them are right for their situation at that specific time.

Know Your Money is an independent free financial comparison website, launched in 2004. For more information and to contact John visit

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