The best business advice, opinion, news and expertise in Greater Manchester and further afield.

Friday, 30 January 2015

Friday Guest Blog: Finance Options for Growth

By Conrad Ford, Managing Director of Funding Options 

One of the key symptoms of a booming economy, like Greater Manchester’s, is a liquid one that helps small and medium sized businesses to access finance for their many different requirements. The Chamber's Campaign for Business: Access to Finance message has this message at its core.

In fact, access to finance in Greater Manchester is massively improving, if you know where to look. Given the array of options available, I’ve taken a snapshot of the market and detailed those funding options below for businesses looking to pounce on upcoming growth opportunities.

1) Cash advances based on turnover

Now a core feature of the non-bank finance market, these loans are based on a percentage of your annual revenue and are much more suited to businesses in their growth stages. Your business pays back a percentage of what you make in turnover on an agreed repayment period. Your repayment eases in the quiet months and increases in the months that the business excels. We're finding that these facilities suit retail and seasonal businesses, and the Chamber's latest economic report showing the increase in retail activity is a clear indication of the thriving nature of this sector.

2) Finance to purchase goods that are pre-sold to the trade

Many businesses in Greater Manchester  export and import from overseas, particularly from the EU. There are various finance solutions to aid your trade operations but an interesting one that can boost your working capital reserves is to raise finance off your future purchases. This allows you to purchase large quantities of goods, providing any lender can track it from the purchase to the end client i.e. you sell to the trade or a business. 

3) Need new equipment and machinery to increase operations

Take the example of a brewery in Greater Manchester that can double its weekly canning capacity with the addition of a high-tech canning machine. If it doesn't have the cash up front to afford it - yet needs the machinery urgently to fulfil a large order from a major supermarket - the brewery can explore various asset finance options to get the machine without forking out a chunk of its capital for the purchase. If new equipment is a part of your plans to grow, make the equipment pay for itself.

4) Secured commercial loans

Unlike traditional lending markets, you can secure a term loan with your assets in a matter of weeks, rather than months. It makes this option ideal for quick growth, providing you have collateral with equity remaining in it. Lenders here will differ in what assets they prefer e.g. different types of property, different types of sites, and some lenders are happy to take security that has an existing charge on it from, say, your bank; a term known as second charge lending.


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