How can small businesses keep up with equipment needs?

Small business owners don’t have it easy, do they? One minute, you’re a book-keeper checking incoming funds and outgoing payments, and the next you’re an office manager ordering in stationery supplies and making sure there’s enough loo roll! However, one responsibility that most definitely lies in the hands of the owner is how the company is financed and where it’s going.

Of course, one of the very first things to consider purchasing when you’re starting up – and, indeed, throughout your company’s lifespan – is how to fund must-have equipment in the workplace. Whether you’re a restaurant looking to buy tables, chairs and kitchen essentials, or an office space in need of computers and desks, there’s no doubt that it will involve a sizeable outlay of cash – which you’re unlikely to have to hand.

Borrowing money is an option, but it can be tough to access sufficient funds if you don’t have a proven track record for your financials. So, this is where alternative finance comes in. Of course, the very word ‘finance’ often sends chills down the spines of many an MD, with high interest rates and aggressive debt collectors often springing to mind.

However, turning to lending is in fact on the increase, according to Wesleyan Bank’s latest report. It revealed that over a quarter of those asked say they now ‘regularly’ turn to external finance, up from 20 per cent two years ago

With this in mind, it’s important to consider some key factors when choosing the best finance option for you – and your business:

Service

When beginning your search for alternative finance, it can seem like an absolute minefield and it’s easy to become bogged down with the various packages and payment plans that are out there. However, the level and type of service you receive is key. One of the benefits of choosing an alternative finance provider over a bank to loan money from is the personal service you’re likely to get – you’re more than a number to them.

Initially, a representative from the provider will come to meet you and look at your workspace. They’ll want to know about the company, what your business plan is and, importantly, they’ll want to see some hard figures. Remember, their ultimate goal is to lend you the money, so be as open and transparent as possible to allow them to help you.

A good provider will establish a long-term relationship with you, meaning you can return for additional funds later if needed.

Speed

One thing to definitely have on your list of questions is how fast you can access funds. Look out for alternative finance companies that have their own funds, meaning they can give a quicker response. Ask about payment plans and how long you have to pay the money back, remembering to factor in any fit-out costs and extras that may spring up along the way.

Your provider will want to see accurate costs of what you’re planning to spend the money on, so make sure you have these to hand so that the process can go through as quickly as possible.

Security

Consider that you may be asked for security against the loan – sometimes, you can borrow money against existing equipment assets (if your business plan is strong). However, you may be asked for other means of security, such as property.

It’s also a good idea to speak to the Federation of Small Businesses (FSB) for impartial advice and support.

Of course, alternative finance isn’t for every business, but for an SME that doesn’t have three years of annual figures to show a bank, it can be the cash injection that’s needed to get things off the ground.

Did you use alternative finance to kick-start your business or do you still regularly rely on such finance to fund ongoing equipment needs? Leave me a comment below and we can discuss how Academy Leasing can help you.