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In an ideal world, the costs of doing business can be covered by the proceeds of work already undertaken or goods already sold.

Unfortunately, we do not live in an ideal world. We live in the world of late payments, long gaps between paying for supplies and generating revenue from them, seasonal fluctuations, challenging trading conditions, the need for capital investments and new businesses that have not yet generated any revenue.

That means there is enormous scope for a chasm to open up between the costs of doing business and the funds available to meet those costs.

Business finance exists in a wide range of forms to close this gap and smooth the flow of money through a business.

The finance options that will be appropriate for different businesses will depend on the precise challenges they are facing, but can be broken down into the following broad categories:

Working Capital Funding

Working capital finance is the amount of money needed to cover the difference between the value of stock and debtors in your business and the number of creditors you have.

Maintaining a healthy cash flow is vital for any business, but doing so can be challenging, even where sales are strong. Fortunately, there are several finance solutions to help in these circumstances, including credit cards, overdrafts, debtor financing and stock finance.

Finance for longer-term assets

Growing your business will often involve buying new assets, such as equipment, vehicles, machinery or premises. The costs of these items are often too large to be covered by general expenditure and finance is often the only viable way to continue with such plans. Examples include, commercial mortgages, business loans, hire purchase and leasing.

Start-up funding

Money is often the greatest hurdle for people wanting to start a new business, but there are various options available to people who are unable to fund a new venture out of their own pockets.

Options for start-ups, include business loans, family loans and investments, outside investment, soft loans and grants and business angels.

International Trade Finance

Trading internationally can put particular pressure on cash flow as a result of the large amount of time between sending and receiving goods and payment. Several dedicated finance options have been developed to deal with this challenge, including import loans and export finance schemes.

Covid-19 Credit Guarantee Scheme

Large parts of the economy are facing restrictions well into June, so many Covid-19 loan schemes have been set up to assists businesses throughout these uncertain times.

Operated by the Strategic Banking Corporation of Ireland (SCBI), the Covid-19 Credit Guarantee Scheme offers up to €2 billion in lending to eligible businesses.

Ranging from €10,000 to €1 million, loans under this scheme are available for terms of up to five and a half years. As well as this, financing will be offered through a range of term loans, working capital loans and overdrafts.

Covid-19 Business Loans

Another scheme made available is through Microfinance Ireland. Offering up to €25,000 with zero repayments and zero-interest for the first six months and the equivalent six months interest-free subject to certain terms and conditions.

Ranging from €5,000 to €25,000, repayments for these will commence in the seventh month for the remaining period of your loan. In the seventh to twelfth months, the Government will rebate you the interest rate in the following six months.

Covid-19 Online Retail Scheme

A new €5 million Covid-19 Online Retail Scheme is also now open to eligible Irish-owned retail enterprises that had 10 or more employees on or before 29 February 2020.

If this company have the potential to create and continue jobs, generate growth online and have the ambition to go international with their business in the future, applicants will receive a grant ranging from €10,000 to a maximum of €40,000. This scheme closes on 25 May 2021.

For more information on loan scheme options for your business, please visit the Enterprise website.

Alternative Finance Options

Traditional finance options will not suit every circumstance and the internet has enabled a range of alternative finance options, like the above, to develop in recent years, with crowdfunding being the most notable example.

However, simply looking for the easiest funding to obtain is unlikely to meet the needs of a business in the long term. Debts that cannot be repaid comfortably can signal the end for a business, while new shareholders with wildly different plans for the business can be similarly problematic.

In the last year, many businesses have taken on extensive debt through these various Coronavirus loan schemes.

It is important that businesses make preparations now to repay these loans as it may affect their ability to seek out additional finance in future.

How we can help

Business finance needs to be approached strategically and with a holistic view of the business and the needs of its owners.

A wide range of finance options exist and some of these are easier to obtain than others. They can usually also be configured in a near-infinite range of ways.

Identifying the right option for your business is not necessarily an easy task and so seeking advice can vitally important.

Please contact us today for advice on financing your business plans.