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Beer & Partners Guide to Getting Funding
05/05/2009
Growth Invesment network member Beer & Partners has launched a free guide to enable small companies to secure funding in a difficult economic environment.
As the recession hits, small businesses are finding credit hard to come by and in many cases banks are withdrawing established lines of credit. Worse still, debt finance, which was once an attractive option, is set to become an expensive burden.
Debt funding traditionally requires security but for small businesses in a climate of drastically falling house prices this is increasingly difficult to achieve against equity. The upshot is that many small businesses are lacking the working capital required to grow and are now in need of alternative forms of funding.
While the government has introduced some measures to address this, in particular the Enterprise Finance Guarantee (EFG) scheme, many commentators say that such measures have failed to make any significant impact.
In response to this challenge, Beer & Partners, recently launched a new guide to help small companies secure funding and capitalise on the shifting balance of investment opportunities.
Angel investors could be an attractive option to small businesses and Michael Weaver, Chief Executive at Beer & Partners, was quoted:
“The gradual disappearance of debt funding leaves a significant gap. The EFG should in theory go some way to replace this as it offers cash to businesses that can no longer secure bank lending. However, the reality is that these secured loans can be difficult to get as bank managers often aren’t fully aware of the scheme and can be put off by having to take on large portions of unsecured risk. Instead, businesses would do better to look to the rising prominence of private investors, often referred to as angel investors.
“As the capital markets become too risky, investment in businesses is an increasingly attractive option for those seeking better returns. This form of investment presents an opportunity for small businesses seeking working capital or replacement to bank debt. Not only is it more stable as capital cannot be withdrawn - whilst bank debt may be pulled at short notice – but also businesses can receive valuable advice and support from experienced investors.
“While business investment offers high rewards for entrepreneurs, securing funding is dependent on a number of key factors. First is to be realistic and specific about the level of funding required and ensuring this is sufficient to see the business through its entire next stage of growth. Sensible evaluations, coherent business plans and strong management teams are also crucial, spelling the difference between success and failure. For those that get it right the rewards can be high and with the backing of cash and experience they will be in the strongest position to succeed in the downturn.”
A free copy of the Guide can be downloaded here.
Submitted by Lawrence Fenelon