Traditionally, a business in need of finance walked into a bank. Today, there are a range of ways for a budding enterprise to secure the funds it needs to grow. How can a business tell which way is right for them?

Alternative Funders are relatively new, but they have quickly become an attractive proposition to those businesses struggling to find finance through the traditional channels.

The internet has proved a powerful tool for businesses to appeal to investors they may not normally have come into contact with. Crowdfunding begins with you posting your pitch, explaining how much you need, what you are offering in return, and people make a contribution.

Venture Capitalists and Angels operate in the same ball park, although they differ in fundamental ways. A venture capitalist is a business or individual who provides capital to small businesses or start-ups in return for high rates of return. Angel investing is when a person’s disposable finance is ploughed into a company, normally in return for shares.

As the rise of companies such as Funding Circle, a government backed scheme shows, peer-to-peer lending is a true growth industry. This form of lending is designed to be a win-win situation that provides lenders and investors with attractive rates of return while also ensuring that credit worthy borrowers get access to competitive finance.

The amount of bank lending to small businesses has been steadily improving in recent years. Banks have extended an extra £600 million of credit to small businesses in the first quarter of 2015.

All potential funders will want some reassurance that they are not throwing money away if they decide to lend you money.

Here are 3 tips on how to improve your chances of success: -

1. Write a strong business plan. Include an overview of the businesses aims, objectives, structure, legal status, operations, target markets, USPs and financial requirements.

2. Learn to read and interpret a balance sheet and talk with confidence about the state of your business

3. Be realistic about how much you need. It’s harder to go back for more once funding has been agreed.

It could be that you don’t actually need to go elsewhere for funding at all. You could release the money you need through the use of leasing, factoring and asset finance.

Talk to us and see which direction is most suited to you. Telephone Tony Farmer on 01904 717260.