Businesses need finance for a variety of different reasons. Yet, what stays constant is that when businesses access the right funding, they can say ‘yes’ more to their next project, goal and growth plan. The economic environment remains challenging for small businesses, so finding the right funding in this critical time is now more important than ever yet more difficult than ever. 

The ACCA and The CFN’s SME Tracker recently reported that business owners were finding “a perfect storm whereby their costs were increasing but also access to finance was being squeezed”.  

It’s true that when trading through difficult periods, businesses turn their attention to making their external and internal working capital work efficiently, so that they can manage their cashflow. However, 27% of business owners believe support from HMRC’s Time to Pay policies are getting more difficult to agree, 47% are finding that supplier credit is getting tighter and 57% say that external lending terms are becoming harder to obtain.

During the pandemic, the Bank of England data showed that larger companies moved early to raise more finance and secure facilities to provide a buffer for the short-term, largely unknown, future.  It’s understandable that with experienced and multi-skilled boards of directors, these companies felt able to make the tough decisions, whereas smaller businesses didn’t respond for several months.

Now, as we trade though a similar time of uncertainty, business owners should be mindful not to leave their actions too late, as their options will be far less. 


What’s happening in the business funding market right now?

The lending market is naturally becoming more risk-averse to those businesses they perceive as weaker.  In fact, the credit score hurdle to even pass initial criteria checks to be considered is increasing. The affordability checks are becoming stricter and, due to rises in interest rates, costs of borrowing are also going up. 

Nevertheless, there are a range of different products available – which suit businesses and their plans differently. Here are some examples:

  • Cashflow loans have been the core product in the lending world for decades, but the providers have become more in number and the structures can be more flexible
  • Buy now, pay later facilities allow companies to offer credit to their business customers and given the current market, provides a strong tool to boost sales
  • Invoice finance is ideal for companies who offer their customers’ trade credit, because they can be paid a % of their invoice early from a lender.  Selective invoice finance allows businesses to only finance some debtors, whereas full ledger facilities are better for those who have a wide spread of debtors. 
  • Merchant facilities are perfect for retailers or those who use card terminals, especially if the business experiences seasonal ups and downs.

To learn more about each funding solution, select the links above.

With the economic trends past and present, it’s obvious the lending market and interest costs are only going to get tougher. Yet, business owners should try to not shy away from taking that first step to research the market now.

Clear Books and Capitalise 

Clear Books has partnered with Capitalise to help small businesses discover a healthier way to do business and be loan-ready, eliminating the panic and stress often involved in obtaining business finance.

Our integration with Capitalise makes it easier than ever to search and apply for business finance loans. Capitalise is a leader in business lending, having organised over £1bn of lending offers for UK small businesses over the last five years.

Log in to your Clear Books account to see your cash insights on your Clear Books dashboard and explore loan options.

If you’re not yet using Clear Books, you can register for a free 30-day accounting software trial. We’ll even give you a free 1:1 demo to help you get started.

Posted by Clear Books