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4 Alternative Sources Of Business Finance For Recruiters

A guide to UK Corporate Tax

In a previous blog ‘Is Raising Capital The Right Path?’ we examined whether you need to raise investment to scale your enterprise.

This is never a cut and dry decision; it will vary, depending on circumstance. But what if a funding round turns out not to be right for you? There are a variety of other financial routes you can go down instead.

What are these sources of business finance? We’ve listed four of them here, for a sure start to your growth as a recruiter.

  1. Specialised loans and leasing

Many banks have become wary about granting overdrafts and loans. So you might face rejection if you can’t meet their strict lending criteria, especially if you’re a startup without much trading history to show.

Alternative lenders, on the other hand, tend to be quite forgiving. They prefer a one-on-one relationship that’s considerate of where your business is now, and where you may be heading. ‘Typical’ levels of risk don’t matter as much. As a result, applications often have a smoother path to approval.

Leasing, meanwhile, lets you fund things like equipment and even fit-outs on a timeframe you can keep up with. The payments are spread out, and you’re able to claim tax back on the cost.

  1. Equity crowdfunding

This is a slightly different concept from reward crowdfunding, in which business owners give their sponsors something as a gift for the investment. When we turn to recruitment, such rewards are harder to offer. Instead, look into equity crowdfunding – pitching for a certain amount, over a certain number of days, from public investors in return for a share in the company.

You must build a crowdfunding profile (with many to choose from), set the investment deadline, and explain why people should back your growth aspirations. It’s one of the sources of business finance that is rapidly rising in popularity, because it can come from anywhere.  

  1. Commercial mortgages

Rent becomes a monumental cost for recruitment agencies as they grow. There may come a time when you decide to buy your own premises, and a mortgage can bring this within reach

Like a regular mortgage, it’s possible to fund your commercial building with a loan – typically 80% or less of the premises value. Recruiters who want to expand at home or overseas may use it to mediate the upfront expense over several years.

But again, like a normal mortgage, the repayment terms vary. Expect the interest to be slightly higher than it would be for private property. Going to a broker, and finding the best deals, is essential.

The mortgage provider will likely ask to see a business plan too, to give them confidence in your future financial strength.

  1. Microloans

Sources of business finance keep getting more innovative. One of the most exciting developments is the concept of a microloan – small, mid-term cash arrangements.

Essentially, microloan networks are made up of investors who want to see a quick return on their stake – which is usually no more than £15,000. You apply, undergoing a credit check with data inputs, and join the peer-to-peer economy. Then it’s a matter of waiting to see who takes you up on the offer. Microloan specialists have been set up for precisely this reason, giving advice to business owners.

You can pursue either of these avenues when the time seems right. A financial service, like RJF Accounting & Business Support, can aid your choice by clearly outlining each one and putting them into the context of your business. Speak to us today, and gain real-world investment experience in the recruitment sector