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A guide to raising business funds in Liverpool

At some point, most successful company owners find themselves wanting to borrow money. Sometimes, they need to do so because of cash flow issues. Normally, however, it’s because they need funds to expand their business.

If you are in this position, your Liverpool accountant will be there to advice you of the best approach to take. As you will see, there are lots of options, which can be confusing. Researching all of them to ensure you make the right choice would be very time consuming, so taking advice from an experienced accountant is always worth doing.

Over the years, they will have helped many other firms to apply for loans and funding. It is, therefore, wise to tap into their experience and give yourself an edge.

Competition for financing in Liverpool is high

You need to bear in mind that when it comes to funding, there is a lot of competition. Every year, around 4,400 entrepreneurs choose Liverpool as the home for their new business. Most of them apply for loans and funding to secure the initial capital they need to get started.

Plus, at any one time, there are around 14,000 firms operating in Liverpool city, many of which are seeking funding. When you need cash for your business, you have to know what you are doing to secure the funds you need, as you can be sure that plenty of other local businesses want it as well.

Hopefully, you can see why speaking to your Liverpool accountant when you need finance makes sense. Now, we are going to quickly look at some of the ways you could raise funds if you are based in this city.

Local funding schemes

Liverpool-based businesses are somewhat lucky because they are operating in an area with a very active Local Enterprise Partnership team. At any one time, there are several funding activities that you can access. Right now there is funding available from the Northern Powerhouse Investment Fund (NPIF). Provided you meet the criteria, you can secure the cash you want. Another example is the Local Growth Hub scheme, and both the LEP and Local Growth Hub scheme offer advice and other kinds of support.

A well-connected accountant that works in the area will know about many of these schemes. Usually, they will be able to determine if you are likely to be able to successfully secure funds from that particular source. This helps to ensure that you do not waste time applying to organisations that will not be able to help you. They will also be able to help you to navigate the application process. Including providing you with the reports you need to strengthen your case.

Loans from traditional finance institutions

Liverpool is a busy city, and home to all kinds of businesses. One of the fastest-growing sectors is banking, finance and insurance. This is great news for you, because it means there are plenty of places you can turn to when you need to secure finance for your own business. If an interview is part of the application process, you will not have to travel far.

Your accountant will assist you in understanding the true cost of each option. This makes it easier for you to narrow down your options and secure the loan that offers the best value. They will also help you ensure that you can afford to make the repayments throughout the year. This is particularly important for firms with seasonal sales.

Loans from contacts

One form of finance a lot of business owners overlook is borrowing from people they know. Provided any loan agreement is drawn up properly by a solicitor, this way of borrowing money can work really well.

Again, your accountant can help you to fully understand the cost of borrowing this way. They may even be able to point you towards other business owners or private individuals who are looking for investment opportunities.

Angel investing

If you are a start-up, you might be able to find an angel investor. The way this form of funding works is that the investor lends you the money you need in exchange for a stake in your business. They get a percentage of whatever you make in return for their capital. However, should your business venture not be a success, you are not required to pay the initial investment back.

The great thing about this form of funding is that often, the investor is an experienced businessperson. Usually, they are more than happy to share their expertise with you as well as provide you with funds. After all, the more advice and support they offer, the more likely you are to succeed and make both of you a healthy profit.

This form of funding is not for everyone because, often, it means someone else being involved in the business, but it can work. Should you go down this route, you will need a Liverpool accountant to go through the financial implications with you. It is particularly important that you understand just how much of your profit you will be paying the angel investor.

Venture capital

If you are running a relatively mature company and are working in a sector with high growth potential, you may be able to secure venture capital funding. This form or business funding is not for everyone. Generally speaking, there are a lot of strings attached to the finance agreement, and the investor wants a high return.

Often, their goal will be for the business to be built up quickly, and then sold. In some cases, the venture capitalist will ask for a 50% or more stake in your business, meaning that you end up losing control of how things are done. This is not a big problem if your aim is the same as theirs and you trust their judgement, but it is not for everyone. Even if they have a smaller stake, in all likelihood, they will still get heavily involved in the day-to-day running of your business.

Other options

When it comes to business finance, the above ideas really are only the tip of the iceberg. Your accountant will be aware of many more possibilities. He or she will be able to explain them to you in more detail, so you can identify the best way for you to secure the funds you need.

Posted by Peter
January 31, 2018

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