Ever since the depths of the Great Recession, interest rates have continually hovered around zero in many of the major economies across the globe. This is part of sustained stimulus measures in the UK, US and Europe, as sluggish economic growth and widespread volatility continue to undermine countries in the East and the West.

While some experts are now arguing that perennially low interest rates are proving to be bad for the economy, however, they are continuing to empower business borrowing in a strained climate. This can only be good news, particularly in an age where SME growth and performance is increasingly central to a prosperous nation.

How to Secure the right type of Business Financing for you

While the climate may currently be favourable to business borrowers, however, firms that are looking to secure funding must ask themselves two key questions. Firstly, they must consider the available types of financing and determine which is right for them, before taking the necessary steps to ensure that their application is both successful (both in terms of being accepted and driving their venture forward). Beyond these considerations, here are some additional steps that can help borrowers to achieve their goals: –

Choose the right Lending Vehicle

Historically, SMEs from across the UK would march to their banks when in need of finance, presenting proposed business plans and any acquired orders to support their applications. Recent advancements in technology (coupled with a less than ideal economic climate) has changed the landscape for business borrowing, however, creating new and exciting funding channels such as crowd funding, peer-to-peer lending and affiliate sales through other websites.

All of these options have merit depending on the nature of your business and the funds required for a successful launch, but there is another often overlooked vehicle that may suit your needs. Building societies such as the Kent Reliance were actually build to enable commercial and residential borrowing, in order to empower entrepreneurs and aspiring home-owners nationwide. These outlets typically offer the best terms too, as they are not answerable to shareholders or required to record a fixed, annual profit.

Define your USP and Value Proposition

Regardless of the route that you take, you will need to present a clearly-defined and profitable business plan. The model that you choose is central to this, but it is arguably even more important that you first establish a unique selling point (USP) for your business or the products that it sells.

Similarly, you also need to make a case for the value proposition that you are proffering as a business, both from the perspective of a consumer and any interested investors. Taking these steps can highlight the potential demand for your product and the profit margin per unit, which in turn translates into an estimated value for your commercial idea.

Be sure to present any intellectual property that belongs to the business too, as this is also something that investors and banks look for when identifying potentially successful ventures.

Borrow What You Need, but do not exceed what you can Comfortably repay

Above all else, the key thing to remember is that any money that you borrow stands as a debt against the business. While this can be offset by offering equity in exchange for the money, the capital that you borrow must be repaid by a predetermined point in time.

With this in mind, it is imperative that you budget carefully and adopt an extremely detail-orientated approach to determining start-up and overhead costs. This will ensure that you will borrow precisely what you need (including a small contingency, of course) while minimising the level of debt against your business.

This is a crucial balance to strike, especially in such a changeable and uncertain economic climate.