Generation Magazine 2018 S/S Issue

Page 54


Financing your Family Business in 2018

finance, as opposed to bank loans Before we look at some of the options available to you in order to finance your family business, it is important to look at how important the family business sector is to the UK economy and more so to the local-regional economy. What are important growth prospects, outlooks, & key issues for family business SME’s, according to various business commentators & pundits in 2018?

Family businesses make a significant contribution to local employment Outlook for 2018

According to a report conducted by Barclays¹, the first-generation familyowned businesses will see their revenues rise to £661 billion in 2018 from £540 billion per year (rise of 22% = £121 billion). This in terms of Gross Value Added (GVA)2 for UK economy will mean a £218 billion (rise of 21% from £180 billion annually). The bank also claims that 1 in 5 of their business customers are a family SME. The Survey conducted by Barclays & CBRE3 also indicates that the number of SME in UK is set to rise in 2018 to 2.65 million. The report also indicated that the first- generation family businesses make a significant contribution to local employment and this will increase to 6 million jobs in 2018. According to the survey conducted by Worldpay4, of around 1,000 of SME’s, more than 50% of owners suggested a very positive outlook, anticipating growth in 2018.



Bank loans may not be available at the same levels in 2018

Key Finance issues for SMEs in 2018 Access to finance – removal or restriction of traditional form of finance Business Owners - Lack of understanding of finance options available

Your Business Finance Options Firstly, it is important to highlight this that in addition to the five main clearing banks in UK (Lloyds, Barclays, RBSNatWest, HSBC & Santander) there are at least 36+ business lenders that now operate in UK. These include international merchant banks, specialist merchant banks, challenger banks, boutique funders, Independents, P2P platforms etc. The good news is that there is a rainbow of lenders to cater for potentially all types of business finance requirements. Business Financing can be either Debt Funding or Equity Funding. In this part of the article we would focus on addressing the two main issues for SME’s in 2018. As an alternative to traditional bank overdraft and term loan we will look at asset-based finance, its benefits, forms and how it can help SME’s.

A leaner management structure makes for quick decision making

Profile Wasim Ahmed is the M.D of Trade & Merchant Finance Brokerage, with 20 years’ experience in Banking & Finance. Wasim is an expert in SME Finance and has extensive experience of financing business of all types & sectors.

of an alternative method of business

Specialism Asset-based Finance

Wasim Ahmed explores the benefits

Wasim Ahmed Trade & Merchant Finance Brokerage

However, nearly 52% of the surveyed SME’s, which includes start-ups and early stage business owners shared their concerns that traditional routes to finance, including bank loans, may not be available at the same levels in 2018. The survey also revealed that 30% of the SME owners have experienced difficulties in securing traditional forms of business finance.

Asset based finance can be used to raise cash depending upon the business finance requirement, i.e. working capital, to fund a Management buyout or Management buyin, Acquisition of new business or to fund exports/imports.