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Raising Finance For Your Small Business

New start ups are rising and looking for funding but will the banks help?

You Can Still Raise Finance For Your Start Up Business

The "credit crunch" is no longer in all the headlines and the press have stopped searching to find stories of banks not lending to businesses. New start ups are rising and looking for funding but will the banks help?

Banks do want to lend money, however, only in a safe and responsible manner, and with rates higher than in the past. Lending, after all, is one of their key activities. They prefer deals which meet their tightened lending policies. In order to gain finance, a deal should be positioned with this in mind.

All businesses need money to trade, and understanding the way that a business is funded is a proficiency in its own right.

When it comes to funding a business the options open to entrepreneurs are numerous. Be it your own cash, overdraft, business loan, factoring or leasing. It is a minefield to the inexperienced eye. It is not only High Street banks that can help with lending for start ups, there are a number of other lenders with competitive rates, often lower than the High Street with a more personal service. This wide range of options, together with the Banks being more responsible with their lending, makes it wise to use the services of an expert to obtain your financial requirements.

If a lender has turned you down once than a further attempt will raise extra questions and reduce your chance of gaining what you are looking for. That is why it is advisable to get it right first time not when your bank has already refused!

You should ensure that you have the following key items, when going to your bank:

- A well written/researched business plan
- Financial Forecasts
- Your break even figure and understand how any additional overheads will affect this.
- Your Personal income, expenditure, and a list of your assets and liabilities.

Your business plan should have a good executive summary, highlighting the main aspects of your business and key financial data such as; projected turnover, gross profit, net profit and break-even analysis. It should also cover the following:

- Your Product or Service
- An Analysis of the Market
- Your Marketing Strategy
- Your Sales Strategy
- Your Management Summary (including key staff or advisors)
- Your Financial Plan

Your business plan must be detailed but not too long. Most lenders see several business plans every day and so your plan should be waffle free, but giving all the right details in a precise way.

When discussing the financial aspects of your business, be prepared, for the lender to ask detailed questions about the figures in your plan. You should be able to demonstrate a complete understanding of them, and that they are achievable. Dont take an annual figure and divide it by twelve, especially your sales forecast.

If you present your plan the right way, you can raise funding. The changes in banks lending policies have made it harder but I can reassure you that "lenders are keen to do business in the current market as long as the deal is right".

Tony Hedger
A & T Business Associates Limited

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