Q: We are trying to establish our Domiciliary care service but are finding it difficult to raise finance to keep afloat. We had arranged secure loan early in year but they stopped it due to credit crunch and loan to value threshold change.
Jun 30 2008
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Answered by: Jo Ray Ask a question
If you’re coming up against successive barriers to funding, you may need to be able to take hard look at the business and decide if it’s truly viable. If you can get some objective advice, then all the better, but try to avoid asking people who are close to you; they'll often say what you want to hear rather than be brutally honest.
Regarding short term finance, you could perhaps look at invoice factoring, which banks often prefer to an overdraft. If, for instance, a customer ends up not paying their bill, you could be at risk, but factoring companies are usually quite stringent about credit checking your clients. Invoice factoring is a good option at an expansion stage, when you’re taking on new staff or need to sort a cash flow issue - but if your company is going bust it won’t help.
There is always the Small Firms Loan Guarantee Scheme, through which the Department of Trade and Industry offers to underwrite 80 per cent of the risk for loans of up to £250,000.
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