Finding the right funding path
Mark Gibbons is Funding and Partnership Manager at Rosebud, which is part of Lancashire County Council’s Business Growth Service. Rosebud provides growth support and business loans for growing businesses based in the county.
Through its range of financial and growth support services Rosebud enables businesses across Lancashire to innovate, diversify and expand.
Mark says: “There is a well-worn saying in business that ‘fail to prepare, prepare to fail’ – and nowhere is that truer than when seeking funding.
“For any business considering funding, preparation is the single most important step towards success. Lenders and funders alike want to see that a business has done the groundwork and is clear about both its needs and its future plans.”
Define the need
The first step is to understand exactly what the funding is for. Being precise about the requirement and building in a contingency will not only strengthen the case for support but also demonstrate a clear focus on return on investment.
Select the funding fit
Equally important is considering the most suitable form of borrowing.
Overdrafts, term loans and asset-backed working capital facilities all offer different advantages depending on the circumstances, so identifying the right structure early on will save time and ensure a better fit.
Show commitment
Funders and lenders also look to see what commitment the directors and shareholders are making. The introduction of additional capital from within the business helps de-risk the opportunity and provides reassurance that the management team is prepared to back its own growth ambitions.
Prepare financials
Having up-to-date financial information readily available is another crucial step. Not only does this reduce delays in obtaining a credit-backed decision, it also builds confidence with the lender.
Accurate figures show professionalism and attention to detail, both of which give weight to the business case.
Expect due diligence
Alongside this, management should be ready to answer questions on performance and outlook. This is an essential part of a lender’s due diligence process and should not be seen as a negative sign. It is simply their way of getting to know the business in depth and identifying any potential issues at an early stage.
Tell the story
Numbers alone rarely tell the full story. It is important for business leaders to provide context, especially if there have been challenging periods or more recent improvements. Framing the financials within the broader narrative of the company can bring the application to life and help decision makers see the resilience and potential of the business.
Seek support
Finally, seeking support through the process can make all the difference. Accessing the right support ensures that opportunities are not missed and that the case presented is as strong as possible. With careful preparation, clarity of purpose and the right guidance, businesses put themselves in the best position to secure the funding they need to move forward with confidence.
Mark says: “Preparation is key. Lenders want to see that you have a clear plan for growth and a robust understanding of your financial position. Before applying for funding, businesses should ensure they have strong financial systems in place, up-to-date accounts and clear cashflow forecasts. Demonstrating consistent revenue growth, profitability – or a clear pathway to profitability – can significantly strengthen your application.
“It’s also important to assess whether the timing is right. Debt finance works best when it is used for momentum, not to solve fundamental business problems, cash flow issues or to get your business off the ground. Can you clearly show that funding will generate increased revenues to service new debt?
“I would also say, look at what services are available to support you and chose the best fit for you. Rosebud, for example, specialises in Lancashire only. We have a proud track record of backing businesses that have gone on to scale into multi-million-pound operations – and even take on the business moguls in the Dragons’ Den!
“When preparing to apply, treat the process as seriously as raising investment. You’ll need a solid business plan, detailed financial projections and evidence of good governance and a strong management team. Think about how you’ll communicate your growth story and prove that the business is able to responsibly manage and utilise additional borrowing.
“Finally, don’t overlook the additional support available. Alongside funding, Rosebud provides access to valuable networks, strategic advice and resources that can all support business growth.”
• To explore how Rosebud can support your business on its growth journey, visit https://bit.ly/rosebudbusinessgrowth
