Finding the right lender

The British Business Bank’s annual Business Finance Week (24 September – 3 October) is underway with a series of events across the country, offering businesses of all sizes the information they need to make informed decisions around the funding they need.  

In support of this week long series of events, the Kreston Reeves funding team asks in a crowded lending market when lending decisions are increasingly algorithm led how a business can find a lender to suit often quite specific borrowing needs. 

The borrowing challenge

A business will have different borrowing requirements at different stages of growth. There will be the day-to-day borrowing to ease out peaks and troughs in cashflow typically managed via working capital facility, medium term borrowing needed to fund, for example, new plant or machinery, and longer term borrowing to underpin future growth. 

Different lenders will, quite understandably, take different approaches and appetites to lending, yet in many instances a business will first turn to their existing lender. It pays to shop around as there will always be a lender that is prepared to listen and discuss your borrowing requirements, often providing tailored funding support.  

For short term lending, businesses will often start with their banks to secure an overdraft or loan. Alternative lenders and challenger banks have made significant inroads into the lending market, and whilst decisions will be quick there will be little or no room to negotiate as lending decisions will based on computer algorithms. It is a case of ‘take it or leave it’. 

Asset-based funding is an often over-looked alternative to short term borrowing and is particularly suitable when looking to create working capital and purchase new equipment or machinery. 

For longer term funding, lenders will have considerably more flexibility with the products they provide, but the trade-off is time. A long term lending decision can take upwards of six weeks to agree, meaning advance planning is needed. 

Take advice  

Finding the best borrowing for your business in a complex lending landscape is not often straightforward. It can be difficult to know where to turn and what represents a good deal. 

But finding good, independent advice can also be a challenge. Commercial brokers are unregulated, although the good ones will be members of a respected trade body, such as NAFCB (National Association of Commercial Finance Brokers). Recommendations from your peer group can also be helpful. 

The Kreston Reeves funding team stands independent from lenders and brings impartial expertise of accountants and former bankers that helps businesses make better informed decisions. The team can make introductions to lenders and help businesses prepare the information and materials needed to secure the best borrowing for your business. 

Additionally, the team can provide a valuable benchmark of the various lending terms in the marketplace which that can then be used to negotiate better terms from existing lenders. 

The British Business Bank’s annual Business Finance Week is the perfect opportunity to explore the different funding options open to a business. Having Kreston Reeves on your team will give you that head start. Contact us today.