What finance/funding is available?
Cashflow is the lifeline of a business. Finance/funding can help with cashflow problems and keep your business healthy.
Bank Overdraft
The most common form of funding is the bank overdraft. This facility is regarded as short term finance to cover the day to day working capital requirements of a business. It allows the business to pay its suppliers, employees and other expenses pending receipt of monies owed in respect of service supplies/goods sold.
Bank Loan
Bank Loans are available to cover capital purchases i.e. vehicles, plant and equipment and property. Loans are also available for buying/investing in a business. Loans are repayable over a period determined at the outset and in some cases the period is linked to the expected life of the asset purchased i.e. a Bank would not expect to agree to a loan for a piece of plant repayable over 10 years when the plant in question has a life expectancy of 5 years.
Hire Purchase
HP is an alternative to a Bank Loan. It is a source of finance for asset purchases, i.e. vehicles, machinery etc. The HP Company retains title to the asset being purchased until the debt has been repaid in full.
Leasing
In the case of leasing, the title to the asset purchased remains in the name of the lender even after the full number of lease payments have been made. The Lessee may invite the borrower to purchase title to the asset purchased once all payments have been made for a nominal sum. Rentals are allowable against tax.