How to raise £1m quickly
Debt is the ultimate problem-solver and opportunity creator. The more urgent the challenge or time-sensitive the opportunity, the more important it is for a borrower to access capital as fast as possible. Here’s what anyone that wants to raise more than £1 million (or any amount of working capital you’re after) quickly, needs to know.
Success in business often comes down to cash flow and your ability to raise money when you need it the most. That might be for a variety of reasons:
- You need new equipment, premises, stock or team members to take your business to the next level.
- You may need to plug a hole during a downturn to keep the ship afloat.
- You may have the opportunity to acquire a competitor.
- You have capital tied up in non-liquid assets, so you need funds for cash flow (paying wages, keeping on top of the day-to-day).
More often than not however, when you realise a need for money, you need it fast (within seven to 60 days), and this ability to access cash quickly is what separates successful businesses – and the ones who can take advantage of an opportunity – from the ones that can’t.
So, where do you start?
Borrowing money from the bank
When most of us think about borrowing money, our first port of call is probably the bank. It’s not a bad shout, and indeed you might be able to borrow from them in general, but these guys are not known for their speed.
Even getting your bank manager to talk to you nowadays will probably take longer than 60 days, and their processes and due diligence is not a quick process. That means that if you’ve got a speedy need for cash, they’re not the people to go to – with one exception…
Bank overdrafts
Don’t forget that while your regular bank might not offer you a fast loan if you have an account with an overdraft, then you can utilise it. Now, unless you’ve got serious credit then that’s probably not going to get you all the way to £1m, but it might contribute part of the way – just remember to keep track of the repayment terms otherwise that’s going to quickly become expensive money!
How can I raise money without a bank?
Overdrafts aside, to raise significant sums, you will probably need to explore more options, ranging from non-banks and asset finance to private investors. The good news is that there are lots of ways you can raise money without going to a traditional bank.
Non-banks are a great tool for businesses looking to raise money both now and down the line, providing fast funding options that are designed to meet business demands. Who you go to and why you go to them will depend a bit on the situation your business is in, what you have to trade, the maturity of your business and also what you need money for.
Raising money with non-banks:
Asset finance, leasing and loans
Perhaps the speediest type of non-bank to go to is an asset funder. If you need a particular piece of equipment, then an asset finance funder who deals in leasing and loans could be a great option.
That’s where you borrow money to purchase a piece of kit, and effectively you lease it back from the funder. The benefit here is that you don’t spend large amounts of your capital upfront. For example, if you need a new combine harvester, which can cost up to £850,328, you don’t shell out that amount day one before it’s done any work. Instead you keep cash in the bank for your daily running costs and the loan is secured against the equipment.
One of the great things about these leases and loans is that there are lenders who operate in specific areas – some specialise in vehicles, others in soft assets like equipment for hair salons. Some will even offer revolving credit, which is essentially a pot of cash allocated to you, that you can dip into as you like.
Peer-to-peer (P2P) lending
Platforms like Funding Circle are peer-to-peer lending platforms that allow you to borrow money from other individuals without going through a bank. The site brings together people or businesses that want to lend money with those that want a loan, sets the rates and the terms of the loan and gets things going quickly. Applications take minutes, are generally online in a few days and some even receive same-day funding with money transferred to borrowers within a few hours. Just remember, the success will depend heavily on your pitch.
Venture capital firms
Venture capital firms tend to be big businesses that pool the resources of high-net-worth individuals and invest it. They specialise in doing this and often have specific areas they like to invest in, in line with their knowledge. They usually seek equity in promising businesses and they’ve got their eye out for good returns, so you need to have your facts together. They’re great for more established businesses with a bit of a track record. The downside to this is that it can take three months or more to secure funding, so if you want to look at this option then it’s worth considering it ahead of time.
Start-up incubators and accelerators
Start-up incubators and accelerators are designed to make it easy for younger companies to raise funds fast. They’re often government-backed or have a major business behind them. Again, they might look for equity. How fast the process is to secure funds depends very much on the fund itself.
Crowdsourcing platforms
Similar to P2P lending, crowdsourcing platforms have become really popular in recent years, and are essentially where you put your idea to a group of individuals online and they can choose to invest in it at whatever amount they choose. How quickly that happens can vary enormously, but some people with great ideas and great pitches raise money within hours! Amongst the most famous are Kickstarter and GoFundMe.
How can I raise money to buy a business?
If you want to raise money to buy a business then it opens up different opportunities for raising funds because you can borrow against assets or explore the option for equity partners. It’s something that people can get excited about and see value in.
Talk to your suppliers
One way to raise funds, especially if you’re growing your business, is to ask suppliers if they want to co-fund the deal in return for guaranteeing some distribution for their product. For example, if you own bars or nightclubs you might be able to go to some of your drinks suppliers and ask them to lend you money in return for guaranteeing preferable placement and promotion.
Stuff to sell
You may find that you have items you can sell, or equipment that can be used as security. In particular, if you’re buying a business that has stock or equipment. You may find that you can use that as security for a loan, and potentially sell them after the fact if you don’t need them to repay the debt.
Borrow against your home
Borrowing against your property is always a risky business but if you have good credit and you are putting the funds into bricks and mortar elsewhere then it might be a sensible way to raise cash. If you already have a mortgage and equity in your property you may find that this is more cost effective than borrowing against commercial premises, as well as a faster process.
From pawn brokers to people you know
If you want to get a bit more creative, then you can also look a little closer to home – literally. Your own home and office could be a treasure trove of borrowing capability. Do you have a car, vintage books, machinery or jewellery that you might be able to raise finance against?
Ask friends and family
If you’re confident in your investment then another way to raise funds is to borrow money from friends or family. Now clearly there are downsides to this, and you should always make sure you’ve got a back-up plan for paying them back. However, if you’re prepared to ask total strangers on a crowdfunding site, then why wouldn’t you give your friends and loved ones the chance to get in on a good thing? Don’t be shy – ask, and explain exactly what your plan is.
How can I raise investor money?
On a more formal note, you can also look for investors who are experienced and are on the lookout for opportunities to get involved in different businesses. These might be in the form of angel investors or other equity partners.
Angel Investors
Angel investors are individuals who put their own money into a small business in exchange for a minority stake (usually between 10% and 25%). They are focused on financing small business ventures and providing capital to help them grow. If the process goes well, then you may find investment within a month or two.
Equity partners
Angel investors are one type of equity partner, but there are other people who may be interested in owning a portion of the business as well. For example, a member of your senior management team might want a stake in return for a share of the profits that the business makes.
As a company, and for Matt as an individual, we are an organisation that’s self-made and highly experienced in raising and managing capital in order to fund business ventures. That’s why we love helping other people to do the same. If you have an idea you want to pitch to us, are looking to borrow money or simply want a mentor to help you navigate your own path – get in touch!
