As we have seen in the news last week the government is making a push for SME’s to become more prominent in their own marketplaces. Part of this strategy is to give them more tax benefits and less legislation, i.e. “red tape” to go through. We spoke to finance broker Jamie Davies to get his opinion on how this will affect the future of UK SME’s.
Hi Jamie, what do you think of the new government initiative helping to grow our SME’s?
It’s great. SME’S (Small and Medium-sized Enterprises) need a boost to help compete with larger businesses, to quote David Cameron “Small business is the lifeblood of our country”. The new initiative will definitely give SME’s a fighting chance against larger organisations. You would also think it will help to create more jobs and enhance the economy in general.
Working with SME’s on a daily basis, I am familiar with many of the struggles they face. With SME’s finally getting a fair chance to challenge others in the market place and grow their businesses, now is the perfect time for expansion plans to be put into practice.
Why do you say that now is the perfect time for expansion plans to be put into practice?
It’s not often SME’S are given this kind of opportunity. Any businesses that have been considering expansion, this is the time. Growth is a natural part of progression and that is what this initiative is allowing SME’s to do.
With this opportunity I am sure that many companies will soon be looking for ways to fund their latest development plans. Many people think loans are the best way to obtain additional funding, however in today’s market there are much better alternatives in my opinion.
You’ve mentioned alternatives to loans, what would these be?
The main one that I would recommend specifically for SME’s is Invoice Finance.
As we all know it is very common for businesses to raise an invoice and be paid no sooner than 30, 60 or even 90 days from its customers. Invoice Finance is a cash flow funding method that allows you to release funds that a business may have tied up in invoices. How it works is that the lender uses the invoice as its security and releases a percentage of the invoice value to the client (usually within 24 hours).
Does expansion always mean looking for cash flow funding?
Not necessarily, expansion can mean investing in a new premises. I obviously appreciate that a business usually does not have the means to be able to buy a property outright, in which case they would need a Commercial Mortgage. I guess the benefit to a commercial mortgage is that you will be able to write off any interest from the mortgage as tax deductable.
What would you advise as the next step to SME’s seeking finance?
My recommendation would be any SME’s looking for funding should definitely consider Invoice Finance. If Invoice Finance does not fit your business model, then there are a number of other ways of ways of raising additional funding. For more details I would suggest getting in touch with me or the team here at Touch Financial, you can call us on 0845 388 9725 or alternatively you can email me directly at email@example.com . We have years of experience helping SME’s find the right funding source and we are partnered with over 30 of the UK’s leading lenders.