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  • Writer's pictureBelinda Milton

Imagine you have just received a big order from a reputable company. Before you do an excited jig, you realise that your current cash flow isn't enough to purchase all the necessary stock or equipment to complete your order.

So you quickly contact a loan lender and submit an online application, but the answer is NO, sorry, we can't help.

Now, where do you turn?

I love technology, but it is not always fit for every purpose. In this instance, an algorithm looked at your business income and expenses and decided that it didn’t think you could afford to repay the loan based on your current accounts and bank statements.

What it didn't know was your story. That's what we do. We write your story and then find the most suitable provider who will work with you because they understand your business as a whole.

They understand that you will receive payment 30, 60 or even 90 days after fulfilling that order, but you need to borrow money to fund it. So instead of looking at where your finances sit now, they know that you have money coming in, and they can decide based on that information.

Commercial lending is all about your story.

Where you have been, where you are now and where you are going.

✨Perhaps you made a loss one year because you invested in another company.

✨Perhaps Covid caused a blip in your finances, but here is a list of all the things you did to resolve the issue.

✨Perhaps you went through a divorce, and you needed to take money out the business to pay your partner.

✨Perhaps you bought additional stock because it was cheaper to buy in bulk and will increase your profits in the long run, but it has impacted your cash flow.

Most businesses have a story because most companies don’t run smoothly. We can present your story to a lender that looks at the whole picture and they can then decide based on your specific circumstances and not an algorithm.

So, what is your story?

Reservoir Finance is committed to educating SMEs and working alongside them to support accessing working capital solutions that help businesses thrive and grow. Send us a message if you would like to find out further information.

As much as we all love Christmas, the silly season can be a bit of a cash flow nightmare for even the most seasoned of business owners. Ensuring your business has the correct cash flow to purchase extra inventory and hire staff is a must for any retailer, hospitality or leisure business.

Early planning and preparation can help to avoid some of these festive demands, but it may be that you need some external funding to help you tackle these Christmas cash flow challenges.

There are several funding options that you can put in place that can ease some of the burden this festive season, so that you can spend more time focussing on maximising opportunities and increasing your profits.

Finance Options

I have evaluated the finance options available to the pub and restaurant industry, specifically focusing on flexible, short term finance that you can access quickly to pay for essential preparation, from extra staff to specialist stock during the Christmas season.

You probably don't realise that there are many different types of funding options. In fact, there are enough different types and formats to make your head spin. So, before we dig into some tips for evaluating and choosing the right option, let's take a look at the flexible, short term finance that you can access quickly to pay for essential preparation, from extra staff to specialist stock during the Christmas season.

1. Merchant Cash Advance

A Merchant cash Advance is the perfect solution for businesses that accept credit cards. This innovative product has only been around for a few years, but it is already proving very popular with pubs, restaurants, retail businesses and the leisure sector.

It works by using your future credit and debit card sales to secure funding. Repayments are then taken as a percentage of your card sales, making it a quick and easy funding solution.

You only repay when you make sales to your customers. Repayments perfectly mirror your cash flow and are based on your credit and debit card sales. You repay an affordable percentage when you make sales to your customers, so it will not interrupt your cash flow and there is no such thing as a late payment.

There are no hidden or late fees, no fixed terms or repayment deadlines. The application process is very quick with funding available within a few days.

2. Unsecured Business Loan

A loan needn’t be for life – it can be just for Christmas. You can get business loans that cover a much shorter term – as little as six months, which could provide just the boost you need to service seasonal demand.

In most cases you can even repay earlier without penalty fees.

The variety of loans available is huge and includes products specifically for small businesses and even those with poor credit. You can access £5,000 to £500,000 in as little as 2 days with repayment terms from 6 months to 5 years.

This hassle-free funding solution tailored to your business needs is a simple and quick option to help your business on the run up to Christmas

3. Revolving Credit Facility

A revolving credit facility is a cash flow facility that works in the same way as an overdraft facility, so you can dip in and out of it.

This solution gives you access to funds from £10,000 to £500,000, and you only pay for the funds if you draw it down and only for as long as you need it. This means that funding can be pre-arranged for you, without interest charged until you actually need the funds.

Once the facility is agreed, the money can be in your bank within a few days. You can repay with no penalty and the sooner you repay, the less interest you pay. Interest is charged on a daily basis and there is no long-term commitment, so it provides complete flexibility for your business.

4. VAT and Tax Loans

Paying your Vat or Tax in one big lump sum can be difficult to manage for small businesses, especially if you’ve not been able to set aside enough money throughout the year. Failure to make the payment can result in penalties being applied which can quickly add up.

This facility provides you with the option to spread the cost of paying your VAT, self-assessment, corporation or partnership tax bills over 1 to 12 months, leaving your working capital preserved.

Funds are paid directly to HMRC, or you can draw down a loan facility after paying your Vat or Tax bill and instead have the funds reimbursed into your bank account.

5. Asset Finance (Hire Purchase and Leasing)

If you are looking to purchase a new piece of equipment, a vehicle or other fixed asset, then you might find that Asset finance is a flexible alternative to a traditional loan.

It provides significant cash flow and tax benefits and is a flexible way to spread the purchase cost over an asset’s economic life, whilst avoiding tying up your valuable working capital. You pay for the asset whilst it supports your business.

Asset Finance can be used for both new and second-hand assets, or for releasing value from those you already own.

How to choose which of these options is right for your business needs…

Firstly, taking on finance should make your cash flow easier to manage, not more difficult, so make sure you do your homework to understand which of these financing options is right for you.

Whichever route you choose, it’s important to be clear on two things before you start searching for funding. Why you need it and how much? If you look at all the available options and providers of these services it may seem overwhelming, but the most suitable product will be determined by your specific circumstances and needs.

When evaluating your choices, it is important to keep in mind the minimum criteria, along with the funding amount, interest rate, length of the loan, how long it will take to fund, the credit score required for each individual lender, set-up fees, and most importantly that you can afford the monthly payment.

If that all sounds like too much work, then you may want to consider using a commercial finance broker to do this homework for you.

How a Finance Broker can save you time and money…

A broker will do all the research and analysis of what your business needs, then find a suitable lender, negotiate a deal you can live with, understand the terms of your financing, etc. The list really does go on.

A good commercial finance broker will take the time to fully understand your business and its funding needs and challenges to identify the most suitable facility.

Not only will a reputable, Independent Finance Broker do all the hard work of finding the right loan for you, they will also:

  • look after the loan application,

  • produce documentation to speed up the approval process,

  • make all the necessary calls

  • and then see it right through to the settlement of the loan.

In the simplest terms, a Finance Broker will make your funding process as easy as possible, leaving you free to focus on the core running of your business, saving you time and money.

Don’t leave it too late to get your finance in place. You can access our Free Guide – Quick business finance options for the Christmas rush here.

If you enjoyed this post, I’d be very grateful if you’d help it spread by emailing it to a friend, or sharing it on LinkedIn, Twitter or Facebook. Thank you!

Post by Belinda Milton.

Belinda is a Commercial Finance Broker and owner of Reservoir Finance, a family run Commercial Finance Brokerage helping businesses to maximise opportunities and growth by sourcing the most suitable finance at the best rate.

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