If your client is looking to grow their business, there are some additional funding options that are worth considering.

Enterprise Investment Scheme

Is your client in the first seven years of trading? The government-run Enterprise Investment Scheme (EIS) is designed to help business owners grow their business by offering tax reliefs to individual investors who buy new shares in the company. 

Under EIS, businesses can raise up to £5 million each year, and a maximum of £12 million in the company’s lifetime (including amounts received from other venture capital schemes). 

Venture capitalists

Venture capitalists tend not to fund start-ups but do provide finance for growing businesses in exchange for a significant stake in the company. As professional investors, they can bring extensive financial and management expertise which might make it easier to attract further funding. 

Because venture capitalists rarely make investments below £2 million, they will need to be convinced that your client’s business has the potential for sustained growth and that they have a sound management team to move the business forward. 

Export finance

Growing businesses often export for the first time. While exporting can have significant benefits for a business, there are some risks associated with it. Not least are the longer lead times between providing the goods or services and getting paid. Manufacturers who import raw materials face other challenges. Overseas suppliers want to be paid for materials before shipping, so the need arises for finance to fill the gap between importing the materials and the point that the finished goods are produced and paid for by the end customer. 

Export finance covers a wide range of tools all used by banks to help international trade to flourish. Two of these tools are described here.

• Bonds and guarantees: These enable the business to ‘call’ the bond or guarantee if the seller fails to deliver the goods or services. This enables the business to get financial compensation for the sellers’ bank. These instruments include tender guarantee; advance payment guarantee; retention money guarantee; performance guarantee and customs bond. 
• Letters of credit: These are issued by a bank guaranteeing that the buyer’s payment will be received on time and for the correct amount, assuming the goods or services have been delivered as agreed. If the buyer is unable to pay any or the entire agreed amount, the bank will cover the shortfall. The bank also acts on behalf of the buyer – the holder of the letter of credit – by ensuring that the supplier will not be paid until the goods have been shipped.