What can SMEs use loan finance for?
Finance for SMEs can often be a major stumbling block in bids for expansion and development, placing a great deal of pressure on the companies concerned.
But thanks to schemes such as the government’s Business Finance Partnership giving a much needed cash boost to businesses, maybe the future is not so bleak.
The power of gaining access to finance
In little over six months, the scheme has unlocked around £870 million of lending, which has enabled plenty of companies to benefit.
Loans can allow for the redesigning of financing plans in companies, enabling them to manage costs more efficiently.
This is important in several ways, especially for those in the relatively early stages of business, as it frees up cash-flow which subsequently enables the focus to switch to other aspects of business.
In industries where design and marketing are important this is particularly significant, as the fundamental aspects of the business are transported to centre stage.
Gone is the need to worry about costs that nibble away at a budget, as the new funding can build a strategy capable of coping with any sudden outlays.
Additional finance can also help with the hiring and training processes associated with recruiting new staff, which can enable rapid company growth.
Having a greater number of staff improves the limitations of the business, meaning it is possible to achieve more and thus expand accordingly.
Having the strategy in place which allows for the design of more innovative products and processes again increases the potential reach of the company.
In some cases, loan funding can allow for expansion into new markets and new areas of the globe, with the associated economic and brand awareness benefits.
If assets are of particular importance to the business, for instance in the technology sector, then finance can allow for greater levels of asset purchasing and business restructuring which could ultimately lead to growth.
These can then be incorporated into designs and used as the base plate for company expansion.
Primarily, loans can help SMEs expand in size with the addition of further staff, resources or office space, although there are plenty of other factors that without additional finance may have remained undiscovered.
By Phil Smith