How a company can decide on the most efficient type of funding?

When you are preparing your company (SMEs) for raising additional funds, what are the things to be aware of and decide on whether debt, equity or loan is the best fit for the financial needs?

Does it make a difference if you need the money for current issues or future opportunities?

What about-  how are you going to spend the funds, i.e. company's product/service, improvements in the way the company delivers, financial gaps etc?

Hi there,

The type of debt chosen depends on a couple of things, in real life. Firstly it depends on the shareholders appetite for equity dilution. Secondly it depends upon who would be interested in investing in the type of company it is. To take the second point first, for example, some companies will struggle to get debt at a good rate because banks won't be interested or because their risk averse banking system doesn't look passed the balance sheet and understand potential future growth. The first point is also key, if shareholders are not interested in dilution or the VC or PE's offer is for too much dilution, then that option won't work. 

There are many many other factors. This was just a high level first step summary. If you'd like to know more, let me know. 

Gill  

There are numerous things for SME's to be aware of when they start their funding search. First of all, you can raise money across debt, equity and grants, depending on your financial position. 

The easiest way for your business to get access to the right funding is if you go onto swoopfunding.com, where their system can identify which providers are the right match. Their experts help you get the right funding and tells you about the different opportunities you have as a business. Their platform has integrated more than a thousand providers across debt, equity and grants and the system will match your business to the appropriate ones. 

For debt, many different providers can lend you money. The rate of the loan comes down to your financial position or whether you have something to lend it against. 

For equity, you will need to have a good business plan and depending on your age, it will be a good idea to apply for SEIS/EIS, as this will enhance your chances of getting equity funding. 

Grants are a bit harder, as there are limited grant providers and they all have their specific criteria for what sector you might be in. Moreover, grants are often limited to specific geographical areas and issued for a limited time. 

If you have any current issues and require funding immediately it will be a good idea for you to explore the entire funding market and have a chat with some of the funding experts from Swoop Funding as they can tell you different about the different opportunities. 

If you know that you are going to require funding for future opportunities it is always a good idea to start your funding journey. Some providers have a long process and you will then be sure to not to get into any cash flow issues. 

If your business needs the funds for acquiring assets there are many relatively cheap funding opportunities. 

My best advice for your business is to go onto Swoop Funding, where their platform and funding expert will help you get the right funding across debt, equity and grants. Their platform is free to use and it can also show you, where you can save money on things like utilities, broadband, Foreign Exchange costs and bank accounting costs. 

Thanks for reading.