There are a lot of misconceptions about gaining business funding, so we are debunking the most common of them.
Banks are the only option for a business that requires funding:
Banks are usually peoples first thought when they think about accessing external funding, however, banks are not a business’s only option.
There are different sources of funding and finance providers like MSIF can provide funding for many purposes such as start-up loans, working capital loans, management buyouts etc.
One of our own clients, Henry Cookey of HC:Fit Ninja Training, explained “We applied for a bank loan initially but it was very expensive, MSIF were more competitive on price. They also provide much more than money. They have been on hand throughout to help guide me through the investment process and also offer fantastic post investment support.”
Asking for a large amount of money lowers your chances of gaining funding:
While the final amount of the loan is a decision factor for lenders, it isn’t the sole point your business proposition is analysed on. Finance providers are looking at whether the amount of money requested fits the stage your business is at, the current needs of the business, and what you will be using this money to achieve. If the funder believes you will be able to make your repayments, a larger amount of money should not hinder your chances of accessing finance.
Only businesses that are struggling can/should/need to apply for funding:
False. Businesses of any health can apply for finance. People often see a business loan as a negative thing, a product only necessary for a failing business. However, strong and growing businesses often apply for finance too. We recently loaned money to a business as part of an MBI (management buy-in); the business, Delta Rock was strong, and the management team were ready to retire.
Scott Davis used the money loaned, in conjunction with his own funds, to buy the share capital of the business, giving the existing management a route to retirement. Scott is now in place as the Managing Director, the business is successful, and still growing, and will now repay MSIF over an agreed period of time.
Investors only invest during the start-up phase of a business:
Investors are available at all stages! As explained above, funding is available for any business stage, from start up investments, loans needed for growth or expansion, or even equity releases and management buyouts/buy-ins. If you require funding to make something happen within your business, contact the relevant finance providers and find out if your business need is something they are willing to loan money for.