In the previous instalment, we discussed how you can cover recurring short-term costs such as your tax bills. In this latest piece, we look at longer-term investment for business growth and development.
Ironically, one of the risks of growth is that it might leave you short of cash. Many successful small businesses find themselves in this difficult position – they’re profitable and with great growth potential, but unable to maintain a healthy cash flow during expansion. If you want to take on more orders that you can’t afford to fulfil, or to hire more staff that will drive up the wage bill, a little flipside finance might be the way to soothe growing pains.
Refurbishment and upgrades
Office and equipment renovation can be necessary to help you keep up with infrastructure changes (especially if your business relies on the latest tech), provide a professional environment for dealing with clients and partners, or to ensure your products and services are keeping up with or surpassing current trends in your industry. If carefully planned and carried out, the effort involved can revitalise your business and give you room to grow.
Research and development
Innovation and growth can be stifled without finance, especially when your business is in the early stages. And research and development (R&D) can be equally vital for established businesses, to keep them competitive and growing. However, smaller businesses face several barriers to arranging conventional finance for vital R&D, such as insufficient collateral and lack of a relevant track record. The difference with LDF is we make it possible to raise finance for “soft costs,” if you can tell a clear story of how your research will benefit your business.
Extra help with innovation
In the UK, some small businesses may qualify for corporation tax relief on R&D projects. The Government’s SME tax credit scheme is for companies with fewer than 500 full-time employees. Your project must aim to improve overall knowledge or capability in a specific scientific or technological field, by resolving a scientific or technological uncertainty. The project must also relate to what you do – whether you already work in that field or intend to start, depending on the results of your research. Finally, you must own any intellectual property deriving from the project.
Find out which other areas of your business are key for development using an LDF business loan in the infographic below:
Download our ’11 ways to make money work for your business’ guide to learn more about where to invest in your business to maximise your potential.