In our latest blog, we discussed the many different types of growth your business can undergo in its bid to reach that next level. Whatever form of growth you are going through, there is one recurring theme: needing the right funding in place to support it.
In order to achieve substantial growth, you often need sizeable capital to cover the costs of new assets and recruitment, as well as fund increased operations. While there are many different funding solutions available, not all of these will offer the equity you need to achieve your intended growth.
When searching for growth finance, it is therefore essential to identify avenues where you can access the appropriate amount of funding. Fortunately, there are many high-value options available to businesses, enabling you to get vast sums of money for the expansion of your enterprise.
In this guide, we have put together the best sources of large-sum funding, including how each works, to help you find the right financial support.
Investment
One of the most common ways to get larger amounts of money for your business is through investment. Investors are usually high net-worth professionals who are able to invest in your business either individually or as part of a group, using their own wealth. In exchange, they receive shares in your enterprise.
Depending on the investor and your funding needs, it is possible to get all the capital you require through investment. Investors will often have expertise in business and maybe even in your sector, so an added bonus is being able to seek counsel from these investors to shape your broader business strategies or maybe even provide useful contacts.
If you wish to pursue investment to enable your business growth, the hardest part is finding an investor that fits. Doing so requires networking in the right circles or utilising online platforms. Once you do find a potential investor, you will need to convince them that your business is one worth investing with. This means having a sound plan in place that showcases your growth strategy and the success it will bring in the long-term.
Be prepared with a pitch to illustrate the value your firm can bring and know how to demonstrate the return on investment they will receive. If you can attract a suitable investor willing to place sizeable funds into your business, it can be hugely advantageous in your growth.
Business loan
One of the most traditional forms of business finance is a loan. These are typically associated with banks though, in the modern lending market, there are many alternative providers you may also wish to consider.
Business loans range in value depending on the provider and how much they are willing to lend to you. However, they may offer hundreds of thousands of pounds to suitable applicants.
If you are seeking a high-value loan, these tend to be long-term with repayments made over several years. As such, you should consider this in your financial plan and make sure you have the capacity to meet repayments (including interest) over the loan term.
Businesses loans tend to come in two types: secured and unsecured. With a secured loan, you will have a form of collateral against the loan – such as property and a personal guarantee – meaning that the lender can still clear the balance back if you are unable to keep up with repayments. With an unsecured loan, there is usually a requirement of a personal guarantee.
Higher value loans by their nature will be more likely to be secured. This is because the lender will have more certainty of getting their money back using the security provided, so will be more willing to loan you more substantial sums of funding. However, it does mean that you will need to have appropriately assets to use as collateral, whether that be property or a debenture. If you don’t have such assets, it may be possible to get an unsecured loan, though you can expect to pay higher interest on these.
When searching for a business loan, be sure to compare different providers. Ideally, you want one loan that covers the full amount of funding you need as opposed to many smaller loans, so aim to find one that offers enough capital for your business needs. You should also compare interest rates, admin fees, terms and any other incentives to find the best loan for your company.
P2P lending
Peer-to-peer lending (also known as P2P lending) sees groups of people pool together their cash to lend to a business. It has become increasingly popular in recent years, with more online platforms dedicated to matching potential lenders with firms.
Unlike traditional loans, the people lending to your business may not necessarily be business experts. However, it is a beneficial way of getting valuable loans in exchange for regular repayments as an alternative to a traditional bank loan and can be a lot quicker process.
You should research any P2P platforms you use, as in some cases loans may be accompanied by high admin charges which can inflate the cost of repayments.
If you successfully attract the right lenders to your business with an appropriate pitch, P2P finance can prove a viable option to any company seeking funding without going down the traditional bank loan route.
Grants
Grants are another way to secure sizeable funds for your enterprise. Unlike loans, these do not require repayment, making them an ideal solution for any company that obtain them.
Grants are offered by the government, local councils and industry bodies to businesses who meet specific criteria. In some cases, they can provide very significant sums of money.
Search for loans in your industry or the local area and check whether there are any that apply to your enterprise. Usually, you will need to provide value to your sector or region in some way or create or safeguard jobs. You can search for suitable grants on the government website.
If any grants have criteria you feel your business could meet, it is worth applying to see if you can obtain funding through it. The application process can be lengthy, so it is crucial to make sure you can provide the right evidence to secure the grant for your company.
In some scenarios, a grant may even tie in with your growth strategy if you intend to utilise innovation for new products or processes.
Get funding advice
Seeking high-value finance will help you on your path to business growth – but it is essential to find the right funding. Solutions such as loans, grants and investment are all suitable options to inject working capital into your operations to achieve the growth that you need.
However, with high-value funding, it is vital to make sure you find the appropriate financial source for you, which offers you the capital you need to suit your growth strategies.
If you need advice on how to secure appropriate finance for your companies and its future plans, we can help. Our team of experts have experience across a range of business types and sectors, so they can provide bespoke guidance for your needs.