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Raising finance is often the first hurdle business owners have to jump. Certainly it's one that will face all SMEs at some stage. As tough lending restrictions continue to bite, businesses need to get smarter if they are to get their hands on any investment.

Phil McCabe, of the Forum of Private Business (FPB), says the ever increasing hurdles make it more difficult for small business owners to raise finance "it is becoming increasingly more expensive, particularly from traditional avenues. Add to that the over centralisation of banks and the lack of competition around, and finance is hard to come by"


Stay smart

No one can afford to be complacent when it comes to raising finance "business owners need to get smarter when they're applying for loans. They need to make sure they have business plans in place and all the paperwork that finance companies want to see" says Phil

Huw Morgan, Head of Business Banking for SMEs at HSBC Commercial Banking UK, agrees. He says HSBC looks at each business on a case-by-case basis when deciding whether to lend "when making lending decisions we are looking to support firms with good cash flow management, a strong balance sheet, a sound business plan, a well-balanced management team, a good business record, and who are looking to develop and grow"

Neil Mackay of Advantage Business Angels suggests "you need to put some real effort into preparing a business plan: not a consultant-template-driven one but a well thought out document. Particular emphasis should be placed on sales and the plan should be less than 10 pages of A4" he recommends


Know the rules

When it comes to raising finance there are a number of legal issues to consider. Joe Bedford, corporate partner at  Stevens & Bolton LLP, says when small business owners are raising either debt or equity finance, legal issues to look out for include the use of standard documents by debt providers, requirements for personal guarantees or other security, and the setting of achievable and clearly understood financial covenants.

There may be grants available to assist your business too, as well as private finance. You can use the support search facility run by the Government's Business Link service to find out if there is help for you. To find out more visit:

For more information on starting your business talk to Andrew Macdonald, Your Business partner at Blair Cadell.  Call or click


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