How to get a cash injection into your business

 

There are any number of reasons why your business might need a cash injection.

How would you go about securing it?

 

Sources

The good news is that even in difficult economic times there are still organisations around that are will to lend money to businesses.

So, the obvious answer to the question is that to obtain a cash injection you’ll need to apply for one – though it’s a bit more involved than just that.

Companies like Business Loans Direct or Everline provide business funding loans for companies that have at least 2 years’ worth of trading history and accounts behind them.

The banks are also an option, as perhaps are organisations described as business angels or venture capitalists.

If your business is at the start-up stage then you may be eligible for some forms of government-sponsored help.

It’s also worth considering slightly less obvious sources such as family members or perhaps liquidating some of your own assets.

 

Common themes

There are pros and cons to all forms of finance including cash injections.

Things to consider are:

• why do you need the injection? If it’s a cash-flow issue that might suggest certain approaches to specific types of lender but if your business is fundamentally in trouble and it needs a complete re-structure then that might necessitate entirely different tactics and approaches to different sorts of funds’ providers;

 

• do you understand the reality of your business and its financial position? It’s not unheard of for business owners to lose sight of the financial reality they’re facing due to their understandable passion for their company and its activities. A good accountant should be able to help you here but the bottom line is that if business failure is predictable then there may be no point in injecting good money after bad;

 

• have you considered trying to do without the injection by simply adjusting your existing finances? For example, can you defer a planned item of expenditure thereby avoiding the need for a loan? It’s surprising how often that is found to be a possibility;

 

• how long will you need the finance for? That might make a big difference to who you approach.

 

• how much of your independence are you prepared to sacrifice in order to obtain funding? Remember than some options will involve a lender taking a percentage of your company for a specified (or open-ended) period of time;

 

• if you’re dealing with something of a crisis (e.g. a cash flow problem) – how will you go about making sure that you don’t end up in the same position again? It’s a truism that it’s typically easier to borrow or obtain a cash injection for perceived positive reasons (e.g. capital purchases, expansion, new direction sub-ventures) that it is for situations that could be seen as being attributable to poor management;

 

• how will you guarantee your borrowing? Obviously offering a share in your business is one way but if you’re seeking a debt-based solution (i.e. a loan) then you may need to secure it with personal guarantees.  Have your thinking ready on that one rather than be caught out when you’re asked for it – it’ll look more professional to potential lenders.

It would be sensible to research these and make sure you understand all your options in principle before commencing your discussions and associated applications.