There are so many business financing options available for a new start business. Nearly all the banks can offer a plethora of funding options however which ones are best suited for a new start business.
At XL Business Finance we have been helping many new start businesses for over 10 years and our experience and expertise ensure that a business is provided with the very best business finance options.
Understandably many new starts are drawn to their banks whom can potentially offer equipment and asset finance, commercial mortgages, overdrafts as well as factoring and invoice discounting facilities.
It is tempting to go with the bank who are offering a packaged deal however in doing so you might be storing up future difficulties when it comes to obtaining further credit in the future. Banks are very good at giving it to you with one hand and then taking it away with another. For example, we have seen many instances whereby the bank will offer a small overdraft facility in order to win the factoring business. All that happens is that the customer ends up with reduced limits on the factoring facility to counterbalance the overdraft.
In addition we have seen these initial overdrafts being completely withdrawn after a relatively short period of time. The business would have had far better cash flow if they had gone with a more flexible factoring company .
It may also be that a bank will offer you finance to purchase some assets or equipment. They mat take additional security to provide the funding. These deals may seem very attractive in terms of the interest costs however these assets may just as well be financed via a third party leasing company. A little further down the line you find yourself asking the bank for some fundeing for something which can’t be leased but the bank are fully exposed.
We would recommend that if third party finance is available at the start then this should be seriously considered so you don’t have all your eggs in one basket.
