Financing your business: Banks

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banksThe first funding source which typically comes to mind when borrowing money is a bank (which is effectively why they are in business). Banks typically lend to small businesses on a secured basis using equipment, stock or debtors. The more liquid and readily saleable the assets you have to offer as security, the more acceptable they are likely to be to a banker. Loans from a bank may take several forms such as:

  • An overdraft limit which is reviewed annually and allows you to borrow up to a predetermined maximum as you need it and pay it back as funds from sales and receivables are collected.
  • A short-term loan that is repayable on specified dates.

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