
Borrowing for all businesses
You know your business, we know how to help
It’s the hardest job you’ve ever done. Whether you’re just getting off the ground or planning to expand, we know how to help.
How to use financing to grow your business
Whether you’re learning what’s available or you’re plotting a winning pitch for investors, here’s how to use business financing to thrive.
Running a business can be exciting, especially when new growth opportunities come along, but sometimes it can be hard to know how to finance the next stage of development.
If that’s the case for your business, then external funding could provide a solution, clearing the path to growth and reigniting the potential within your business.
But how do you best tap into this resource when there are so many potential options? That’s where we can help.
Select the tabs below to learn more about each option, find out if you’re ready for funding and get guidance on putting a strong case together.
There are many sources of finance that could potentially be available to businesses, but knowing which is the best one for you – whether it’s for help with day-to-day cash flow, investing in a larger purchase or fuelling exciting growth plans – can be tricky. Here are some of the main options to consider.
For many businesses, the first port of call when seeking business financing will be their bank. One reason for that is the guidance that banks will be able to give. Because of the knowledge they’re likely to have about you and your business, they can help to quickly identify the most appropriate sources of funding. Of course, banks themselves have a range of options available. These include
If you're looking to buy or remortgage business premises, there are several products that could be available to you including buy-to-let loans for business and commercial mortgages. You might also consider talking to a Commercial Finance Broker or a Barclays Business Manager – they will provide guidance, take you through the options available to you and deal directly with the lender on your behalf.
Knowing that you want funding for growth is only one part of the process. Your business also needs to be ready and able to satisfy the potentially diverse requirements of those that might lend to you.
With that in mind, here’s a checklist of three important points to tick off that could help increase your chances of success.
1. You know what type of funding you want
Doing your research can really pay dividends when it comes to business financing. Weighing up the pros and cons of all the options – in advance – can be crucial to a successful outcome.
That’s partly down to how you’ll look when applying for finance. If you’re clear-headed about your funding needs and how you want them to be met, it can help to give people more confidence in lending to you. At the very least, it can speed up the process and help prevent you from wasting time and energy on things that won’t work for you or your business.
But this consideration stage should also focus on your own requirements too, both now and in the future. For example, borrowing from a family member may seem like an easy source of funding initially, and for many businesses it might be the most suitable option. Yet it won’t help you to build up the kind of credit rating that could help to unlock further financing needs as your business develops.
If you bank with Barclays, as we get to know your business we’ll give you a provisional unsecured borrowing limit, which we update daily. This helps us to make a quick decision on funding requests, and often requires you to answer just a few questions in order to get your funding. If we don’t have a provisional limit for you, we may need to ask for additional information such as details on your business performance.
Knowing that you’ve gone through a thorough evaluation process and come to a decision helps you – and any potential investors – feel more confident that the business is ready to take on the type of funding you are considering.
2. You have a good credit rating
Being able to show your creditworthiness could, in most cases, be a key factor in securing funding for your business. But how do you make sure yours is in top condition before approaching potential lenders? Check out these tips on helping to boost your score.
3. You know how to approach potential investors
Getting this right can help prevent wasted time and lost opportunities. It’s essential that you can present your business as a viable investment opportunity.
The best time to approach lenders is as soon as you’ve started to think about your growth plans. Not only can this help to shape your strategy more fully, but lenders may also feel more confident if they’ve been involved in discussions from an early stage.
You should also be specific about what the money is needed for, how you’ll pay your investors back and how long it will take you to do so. And be prepared to answer in-depth questions about your business – potential lenders will want to feel comfortable that your ambitions are being built on firm foundations.
Different lenders will have varying criteria for business funding, so research this in advance and make sure you can satisfy them.
But regardless of who you’re planning to borrow from and the type of lending you’re looking for, it’s essential that you’re clear on your own side of the deal, whether that’s the assets you’re prepared to offer up as security or how much of an equity stake you’d be comfortable giving up.
There’s no foolproof method to guarantee success when pitching for business finance, but that doesn’t mean you can’t give yourself an advantage by presenting your case in the best possible way.
Many lenders, including Barclays, will often use the CAMPARI framework to assess your application. If you can satisfy this model in your pitch for funding, you’ll go a long way to getting a positive outcome. And don’t forget to add in anything that makes your business stand out, for example if you’ve won awards or been particularly successful in a certain area. Think about whether there’s anything relevant that the bank might not ask about but that could put your business in a stronger position.
C – Character: This is your chance to shine, and in business financing terms that means convincing investors that you – and your business – have the professionalism to look after their money and give them a return. That can incorporate many things, from the confidence you have in your idea, to your business’s record in making loan repayments. Having a strong brand reputation can go a long way.
A – Ability: You need to show clearly that you and the people in your business have the knowledge and ability to generate growth from any funding that’s provided. Your track record as a business is likely to be considered, as is the quality of its products or services and the strengths of the management team. Your staff could also play an important role – having good people in key positions helps to give lenders confidence, so consider taking on outside expertise if you need to bring additional expertise into the business.
M – Means: Is your business equipped to deliver on your growth ambitions? This is where the strength of your business plan comes into action. You should try to show where you have, or will have, a competitive advantage in the market. You should also prepare detailed financial reports with best and worst-case scenarios, future growth projections, prior performance records and in-depth company expenditure.
P – Purpose: Lenders will want to know what the money will be used for and how it will be used to generate a profit or improve the business’ financial situation. This part of the framework is also where prospective investors will consider whether the borrowing is in the best interests of the business, whether there’s a good enough reason for requesting it and whether it fits in with their own lending guidelines.
A – Amount: How much are you asking for, and is it the right amount for your stated requirements? Potential investors will want to see how you have decided on the level of funding you are asking for, how it aligns with your financial projections and what the business’s own contributions to the project may be. It’s worth taking the time to scrutinise this properly. While it’s a good idea to be prudent, asking for too little could be counter-productive if it means your plans are judged as being less likely to succeed.
R – Repayment: You’ll need to be able to show concrete evidence that you will be able to afford any repayments, or provide solid projections that indicate how you’ll be able to pay back your investors over time. Lenders will be looking for details on the source of the repayment money and will likely be considering areas such as the health of your cash flow, your profit margins, and if the repayment period is acceptable.
I – Insurance: In many cases it’s important for you to be able to show that you have a fallback plan in case things go wrong. Do you have another source of repayment? Has any insurance been taken out that would allow you to repay the financing if you fall short of your targets? If you’re securing the finance on an asset, make sure you have an up-to-date valuation to show.
Recent data shows that 70% of SMEs would rather grow more slowly than borrow to grow faster3. While the financial and other obligations of business funding need to be considered carefully, so should the opportunities it can provide.
Successful borrowing can often be positive for the long-term health of a business, helping it to develop and ultimately become much stronger.
And for many businesses with ambitious growth plans it’s likely that, at some stage, they will consider taking on financing to help achieve their aims.
That’s certainly the case for glass artist Ray Youngs, who found that borrowing money from Barclays gave him much more than just the financing he needed to move his business, Skullpture Glass, to larger premises.
I didn’t realise that kind of help was out there, and certainly not from a bank.
Owner, Skullpture Glass
Working closely with the bank also gave him the confidence and contacts to put additional growth plans in action, including exploring further expansion through new international opportunities.
To find out more about Ray’s story, watch our video
You know your business, we know how to help
It’s the hardest job you’ve ever done. Whether you’re just getting off the ground or planning to expand, we know how to help.
See your business through your customers’ eyes
Professor Stelios Kavadias, Director at the Cambridge Judge Business School, explains how to look at your business like your customers do.
How a good forecast can benefit your business
A cashflow forecast is a useful tool – it can warn you of challenges ahead, help you achieve steady growth and steer you through a downturn.
Adapting to change
We’ve put together a series of articles and guides to support you and your business, and help you feel more confident about the future.