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Whilst some businesses never have to seek outside finance, most will have to raise money at some point. This may be to fund short term cashflow or the actual growth of the business. There are a number of different types of finance available and it is important that an informed choice is made to get the most appropriate funding for the business.

Overdraft Facility

This is an agreement with your Bank where the account is allowed to go overdrawn up to a pre-arranged limit.  This limit will be agreed by the bank for a maximum period of one year and will have to be re-negotiated at the end of that time.

Bank Loan

While an overdraft should be used to finance short term cash needs, a bank loan should be used to finance longer term business needs.These needs could include the need to move premises, the development of new markets or the purchase of fixed assets such as machinery and vehicles (also see Asset Finance).

Invoice Finance / Factoring

This is commonly referred to as factoring.  It is suitable for businesses who sell to other businesses either in the UK or overseas on credit terms, ie: the business gets paid in say 30 or 60 days from the invoice date.

Asset Finance
Asset Finance enables the business to purchase physical assets. Examples of the type of assets that could be financed are vehicles which could be business cars or commercial vehicles, plant and machinery, machine tools and computer equipment.