How Can SMEs Get The Money They Need To Grow?

The recent economic downturn and recession had an enormous effect on small and medium sized enterprises (SMEs), restricting their access to funding and the capital necessary to grow and expand naturally.

This has made the last few years a difficult and testing time for those looking to take their business in the right direction and to the next level. As funding from traditional sources of credit and capital has dried up, SME owners have begun to look to alternative sources of credit and, fortunately, found some lenders still willing to invest.

Here we take a look at other ways SMEs can get the money they need to grow.

Bridging Finance

Though not many SME owners will have contemplated using a bridging loan, they can be an interesting alternative means of financing growth in smaller businesses. Essentially, a bridging loan acts as a way of securing finances for an interim period until the next stage of investment can be secured.

This next stage of investment will generally be used to pay back the bridging loan. The fact that bridging loans usually need to be tailored to meet the needs and demands of both parties, and can be complex arrangements at the best of times, means that they will often require the professional expertise of an accountant or detailed use of accounts software for small business.

Crowd Source Funding

Crowd sourcing has become an increasingly popular means of financing a wide range of projects that don’t necessarily have to make money. However, more and more SMEs are looking to crowd sourcing websites, such as Kickstarter and Funding Circle, to find funding from different investors.

Such sites allow businesses to make their online pitch and appeal for funding from as many investors as they wish, though they will only receive the investment if their proposed total is met.

Crowd sourcing is a fantastic way for SMEs to find the money they need to grow, particularly if they feel it would be difficult for business-minded communities to pass up a great investment opportunity.

Other Online Funders

There are a variety of other funding mechanisms that online business owners should consider. A recent Telegraph article detailed the unique way in which entrepreneurs can personalise financing projects, while also mentioning another alternative source of finance, Market Invoice.

This unique financing operation lends SMEs money against the value of their invoices, allowing better cash flow management and quicker access to funds.

As SMEs struggle to find funding from traditional lenders, it appears the number of alternative means of finance will continue to grow, providing business owners with the mechanism by which expansion remains possible.