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You know that you want to grow your business and need investment to do it, but where do you start? Managing Director of SWIG Finance, John Peters gives you the basics of where to look and how to prepare for business funding.

Planning for Investment

I don’t want to panic you, but we are a couple of months into the year already – and I wonder how many readers have kept to their New Year’s resolutions? Let’s be honest now…

I heard someone recently say that sticking to a New Year’s resolution is like negotiating traffic. I can see their point: I set off most mornings intent solely on getting from home to office, but any number of things could delay me – red lights on Dracaena Avenue; road works on Commercial Road; an accident at the Norway Inn which means a snail paced tour around the back lanes of Perranarworthal and Perranwell…then there are distractions on the radio, and a phone call from my son telling me he has left his school bag in the car….all of which contrive to  distract me from focussing on the one thing I am trying to do – reach my destination.

Many business owners resolve to put new strategies into place, but are distracted by the very demanding task of running their business. Standing aside and allowing yourself to objectively plan ahead and stick to the plan can be the hardest part.

So you know that you want to grow your business and need investment to do it, but where do you start? Well, by spending some quality time forecasting ahead to help you understand what your requirements are, and writing it down in a plan. Tackling a business plan for the first time can be daunting, but there are plenty of good professional advisors who can give you help if you need it and SWIG Finance can point you in the right direction.

Any prospective funder will expect to see your plan. We don’t want to wade through acres of paper, but we do need to understand your business and where it is going – and as a loan provider, we need to be confident that you can afford to borrow the money and benefit from the investment.

Alternative Funding and the CDFI Solution

In December the government reported that the most common enquiry to its national business support helpline, accounting for some 26% of all enquiries, related to finding finance. The choice in the kind of finance available basically falls into three categories – grants, debt and equity. For many small and medium sized business owners seeking investment, grants and equity funding aren’t really an option, because they don’t qualify, are not at the right stage of development, or don’t wish to dilute ownership of their company. So debt finance, providing the level is right for the needs of the business, is often the most appropriate route for investment.

The banks of course are the main providers of debt finance for business, but many good businesses can’t find all the borrowing they need from their bank, whether due to a lack of trading history, ‘track record’, available security, or other reasons which put them outside of the bank’s lending criteria. Increasingly, bank managers are referring these customers to alternative sources of finance such as crowd funding or asset-based lending.

The most established source of alternative funding is Community Development Finance Institutions or CDFIs. This is a national network of not-for-profit organisations which exist to support local businesses where there is a shortfall in bank lending – and in Cornwall, this is SWIG Finance. We are a Truro-based company that has successfully worked with hundreds of Cornish businesses, alongside the banks, for over 25 years.

How can SWIG Finance help?

I was delighted that SWIG Finance was able to support a dynamic young business called Engine House VFX last year. Engine House, based at Tremough Innovation Centre, are a digital media business creating computer generated images and animations for a wide variety of clients from advertising agencies to film studios and games companies.

The business owners Mike Richter and Jason Robbins approached SWIG Finance after being declined by their bank for a loan to support their growth plans. After engaging with the business, we approved a loan of £20,000 for them to invest in new hardware and software licences to exploit emerging market opportunities and larger contracts within the animation sector.

Engine House VFX is a great example of a knowledge-based business exporting its expertise outside of Cornwall and successfully competing in a growing international market.

If you have made a New Year’s resolution to grow your business – or start one – in 2015, there are plenty of funding options and business advisors out there to help you succeed. So make your plans, ignore the distractions, and keep focussed on your destination. Enjoy the journey!

This article appears in the February 2015 edition of Business Cornwall Magazine.