What's new in the world of tax and business? Here we feature advice and information on the latest hot topics. To view our full archive of articles, please click here.
Securing funding for your business
The government have recently launched a new scheme to allow those small businesses who are unable to access finance to be matched with alternative finance options. Here we outline the key points of the new service, and we also suggest other types of funding to consider when searching for finance for your business.
The new matchmaking service for small businesses
The government's new programme will require nine of the UK's largest banks to automatically pass on the details of small businesses they have rejected for finance to three finance platforms: Funding Xchange, Business Finance Compared and Funding Options.
These platforms will then share the details with alternative finance providers and help to 'facilitate a conversation' between the business and any provider who expresses an interest in them. RBS, Lloyds, HSBC, Barclays, Santander, Clydesdale and Yorkshire Bank, Bank of Ireland, Danske Bank and First Trust Bank are all required to offer access to these finance platforms - although small businesses must give permission before their details are shared.
Alternative sources of finance
Raising funds for a business remains a significant challenge for many. Whether you are looking to start a new business or require capital to expand, there are many factors to consider, in addition to whether you'd like to utilise the government's new funding initiative. You may want to consider some alternative ways of securing finance.
Make use of an overdraft
Overdrafts are credit facilities that have a set amount of money, agreed between you and your bank. Using an overdraft may provide a flexible means for covering short-term outgoings and any potential unforeseen or unexpected business expenses. Overdrafts, however, should not be used as a long-term source of finance, and continued use may prompt your bank to question whether you are in financial difficulty.
Apply for a grant or government support
A grant is typically supplied by the government, charities or local councils. For those that qualify, grants can be a useful source of inexpensive financing. Grants are typically non-repayable: however, strong competition for such a source of finance persists. Additionally, grants are usually only offered to specific sectors for specific projects that are in their proposal stages.
In some instances, you may be asked to cover part of the cost of your project or to match the funds awarded to you.
The British Business Bank is a government owned company which aims to make finance markets work better for small businesses and works with over 80 partners such as banks, leasing companies and venture capital funds. Further information can be found here: http://british-business-bank.co.uk/
Sell business shares to an investor
Making use of this option involves selling part of your stake in the business to an investor. If you choose to sell to an investor, any profit (or loss) the business makes will be shared with them. However, by using this type of finance you will not need to make monthly repayments and you will not be charged interest.
This source of finance only applies to limited companies, so sole traders and partnerships would have to make use of other funding options available to them.
Leasing equipment means you can avoid spending a large amount of money in one lump sum. This is often beneficial from a cash flow perspective, although it should be noted that in some cases the monthly leasing instalments can be more expensive than buying the asset outright. Leasing will also give you access to a high standard of equipment, and assets can be upgraded easily when contracts end.
Hire purchase agreements are another option for those who want to acquire business assets without having to pay for the whole item up-front, and contracts usually include an option to purchase at the end of an initial period.
And don't forget, the cost of qualifying business equipment is usually tax deductible - talk to us for further details.
It is worth considering a range of options when sourcing finance for your business. We can advise on the most suitable type of finance to suit your needs - please contact us for further information.
- October 2016: 2016 Autumn Statement: all eyes on the new Chancellor
- September 2016: Making Tax Digital: the key areas
- August 2016: Pension auto-enrolment: don't pay the price for non-compliance
- July 2016: Brexit - what are the likely implications for business?
- June 2016: Business world seeks stability following Leave vote
- May 2016: Register of 'persons with significant control': the new requirements for companies
- April 2016: Reviewing the new tax reporting rules for multinational companies
- March 2016: What's in store for the new tax year?
- February 2016: The Scottish rate of income tax: an overview
- January 2016: Key planning tips for the Year End
- December 2015: The new rules on dividends
- November 2015: A new limit for the Annual Investment Allowance
- October 2015: Tax and property - important changes ahead
- September 2015: The latest changes to employment law
- August 2015: Creating an employee expenses policy
- July 2015: Sun, sea, sand…and work
- June 2015: Pensions auto-enrolment: are you up-to-date?
- May 2015: Claiming tax relief on refurbishment
- April 2015: New tax year, new rules: changes to business and personal tax
- March 2015: The new Marriage Allowance
- February 2015: Saving tax before the 5 April year end
- January 2015: VAT for digital business
- December 2014: Stamp duty reforms and business rates feature in pre-Election Autumn Statement
- November 2014: Saving tax on seasonal gifts
- October 2014: Social investment tax relief - could you and your community benefit?
- September 2014: Flexible Working Rights
- August 2014: Tax breaks for charitable giving
- July 2014: The sun is shining: let your business grow
- June 2014: Claiming the new NICs Employment Allowance
- May 2014: Tax-efficient estate planning
- April 2014: The New ISA
- March 2014: 2014 Budget Round-up
- February 2014: Could you save tax ahead of the year end?
- January 2014: Contingency planning: is your business prepared?
- December 2013: Seasonal tax advice for your business
- November 2013: Expansion - is your business ready?
- October 2013: Is your business adequately insured?
- September 2013: Charities update: some recent changes
- August 2103: The new flat-rate state pension: winners and losers
- July 2013: An inspector calls… coping with an HMRC investigation
- June 2013: Raising finance for your business
- May 2013: Ten top tips for reducing your tax bill
- April 2013: The new pension auto-enrolment scheme
- April 2013: The new cash basis: 'simpler' income and expenses?
- January 2013: Saving tax ahead of the year end
- November 2012: Child's play? The new rules on child benefit
- October 2012: Real Time Information: are you ready?
- September 2012: Are you up-to-date on pension auto-enrolment?
- May 2012: After the Budget: planning strategies to implement now
- April 2012: Making your business an Olympic success
- January 2012: The 5 April Year End - plan to save tax now
- November 2011: Autumn Statement 2011
- November 2011: Furnished Holiday Lettings
- October 2011: The Agency Workers Directive
- September 2011: Capital Allowances Are Changing: Make Sure You're Prepared
- June 2011: The Bribery Act: What your business needs to know
- May 2011: Don't get caught out by the taxman!