People will always need furniture, so the market will endure, come what may, writes SME Loans’ Rachel Makinson. But with all the giants out there, it can feel difficult to compete – especially when your funds aren’t quite what you would like them to be. In this article, Rachel suggests the different funding options open to independents wishing to stand their ground …

There are many different funding options out there for smaller, independent retailers, enabling you to support the growth of your business and allowing you to promote your products to a much wider customer base. 

So, what’s on the table?

The obvious bank loan

In the past, the most obvious place to go for business funding would be the banks, but since the economic crisis of 2008, fewer small businesses have been able to secure themselves a traditional bank loan. Debt adviser Hadrian’s Wall Capital says that 101 of 120 areas of Great Britain saw net falls in the value of outstanding bank loans to SMEs last year, as banks continued to withdraw from lending to small businesses. 

While funding from banks is certainly more difficult to attain these days, it is not impossible, and for some business owners it may be a feasible – and very workable – funding option. Furthermore, if you have a good credit score, it may even be possible for you to get a loan with reduced interest rates. The traditional bank loan should by no means be completely dismissed as a funding option, but you should keep in mind that getting financial support from the banks might not be as easy as it once was. 

Merchant cash advances and unsecured business loans

Merchant cash advances and unsecured business loans are both good funding options – they’re quick and easy to apply for, and provide you with the extra money you need within as little as 24 hours. A further advantage of an unsecured business loan is that you will be able to borrow money without having to secure the loan against your business’ assets, such as property, stock or any equipment, and a merchant cash advance offers an especially flexible repayment scheme. 

The sum of your monthly repayments is calculated in accordance with your monthly revenue, so if one month you earn less, your repayment for that month will consequently be reduced. As such, you should never feel under any financial strain or pressure. Furthermore, a merchant cash advance is offered on an interest-free basis, helping keep the overall cost affordable for small business owners. 

Buddy up with a business partner

While not every furniture retailer would be willing to compromise some of their authority over their company, having a business partner can be a great way to relieve some of the financial pressure from you, and also has the potential to make the running of your business much more efficient. 

If you are able to find someone who shares your passion and drive for running an independent business, you should consider taking them on board. Contracts can always be drawn up formally with the help of a solicitor, so that both you and your potential business partner know exactly where you stand. 

Credit cards

If used sensibly and with care, credit cards can be a great way to quickly increase your cash flow. The total sum you will be able to obtain is based on your credit limit, which will most likely be much less than what you could get from a loan or a cash advance. Interest rates also tend to be high, which is certainly something to keep in mind if you do opt to use your card. 

Invoice funding

Invoice finance allows you to sell on any of your company’s unpaid invoices to a third party for a cash lump sum. These unpaid invoices serve as proof of the future income of your business, so as such you are able to receive funding easily, without having to depend on a brilliant credit score, which banks often require. 

There are two key types of invoice funding – invoice factoring, and invoice discounting. It is invoice factoring that is generally considered to be much more suitable for smaller businesses. 

At some point or another, the vast majority of furnishing retailers, both large and small, will require an extra helping hand when it comes to finance. Thankfully, there are many great financing options out there, and there will, without a doubt, be a funding option that is suited to both you and your business’ circumstances.

Rachel Makinson is a financial journalist for SME Loans, and content creator for the SME blog. SME is a business credit brokerage that is working to evolve the digital landscape of business finance.