Alternative Finance Options for Company Formation

March’s 2010 budget reflected the enormous difficulties small business and company formation owners were having accessing finance form their businesses. The chancellor also made provisions within the budget to make it easier and ensure that the banks were obligated to lend to the small business sector. However, if you exhausted all conventional lending routes to obtaining finance, what options are still available for you and your company?

Look for investors
OK so many small business owners may be reluctant to give away any proportion of their company to an outside investor, but in a context where there are a limited number of finance opportunities available, it may be worth investigating this option further.

Invoice Factoring
One of the main problems facing small businesses is a negative cash flow. If you take on a factoring partner they will pay out on almost 90% of all the invoices you have outstanding, help you chase creditors and once the invoices have been paid you pay a fee.

While in no way is this a long term strategy, it could help companies get through a difficult period.

Government help

The government has said time and time again how important the SME and company formation sector is to the UK’s economic future and subsequently they have developed a number of schemes to help small businesses during tough financial times.

One of these schemes is the ‘Time to Pay’ initativeUnder this scheme you are given time to pay the taxes you owe. While many accountants warn against relying on this in the long term, in can be of some help in the interim.