It used to be so easy, and fairly quick, to source funding for your business. In fact there was hardly any trouble. A handful of well known banks and major niche lenders and you took your pick.
Post 2008 and now it’s not so easy. There are not only a lot more options that are growing by the day, but you’re also probably never quite sure you’ve found all the possibilities. That’s because you haven’t!
Believe it or not, a healthy number of funders and lenders do not advertise. This may seem to strange to some but there are a few logical reasons for this, which we will come on to. The reality is in order to make sure you find the best funding sources for your business, you’re going to have get creative in finding some of them.
After years of doing just this, I’m going to show you how to find these hidden funding sources. But first...
4 reasons why some funders don’t advertise
Firstly, though, it’s important you believe it when I say there are market-leading funders and lenders out there who don’t need, or want, to advertise.
Why is that? How on earth do these lenders get enquiries and business if they don’t advertise? There are four reasons why.
1 Some funders do not have a marketing division, nor do they wish to have one. They don’t understanding marketing, and rely on a large introducer network to bring good leads to them.
2 For some lenders that do understand marketing, they work out very quickly how expensive getting into the top position on Page 1 of Google is for their search terms. It’s not enough to get onto page 1 of Google anymore. Numerous reports and surveys state that most clicks are received by those companies in the top positions, and the price for being there on a regular basis can be extremely expensive. There is also no guarantee of who is clicking, nor what the quality of the lead that will be received might be. It adds further cost in-house.
3 Some funders have a preference for using brokers, or introducers, and pay them a % of any fees already being charged. The benefit for funders is that good brokers will sort the good leads from the bad leads, and will only deliver leads to the funder that are worth looking at. For a funder this means less resource is required in-house to handle enquiries, and also means that they can dramatically improve the efficiency of their lead generation at no upfront cost.
4 Some funders simply prefer an air of exclusivity, and like that leads are introduced to them. Advertising, for a few, comes across as a desperate and dirty business activity.
I’m sure you could relate to at least a couple of these reasons, and will confirm to you why not all funders and lenders are on the first few pages of Google.
The 9 secrets
So how do we find these “hidden’ sources? Here are my 9 secrets for finding them:
1 Search online directories
There are a good number of funders who do not directly advertise on Google, but can be found in any number of online business directories that do advertise on Google. Type business finance directory or lender directory, and will you will find some interesting lists of firms.
2 Use Business Data Software
This can be an excellent source of info if someone can spend the time doing it. It is possible to buy/rent software that allows you to search businesses and analyse their financial info. An example product would be Avention, or OneSource as it used to be known. As a result, it is possible to view the debentures and charges a business has taken out with any finance houses. The finance house will be listed as the debenture holder. It is time consuming, but if you narrow down your search to similar types of businesses it need not be as daunting as it initially seems, and can give you the most accurate info in the marketplace.
3 Set up Google Alerts
Google Alerts is an excellent news service, which will “alert’ you to any news relating to the keywords you type in and save. For example, you could set up an alert for “business loan”, and every time a relevant news piece is released, Google will email it to you. It's very useful for getting announcements from finance houses, some of whom again will not be proactively advertising.
4 Leverage finance portals
Similar to directories, there are a number of business finance portals springing up in the UK. These are great places to get a whole list of funders together, leveraging your time as best you can. Again type finance portal, or business funding portal into Google, and see what you can find.
5 Don’t just ask your accountant
Many business owners will in the main look at a couple of pages of Google, and ask their accountant. This is in the belief that the accountant would be the most likely business partner who would know other finance companies. Whilst some do, it is my experience that most do not, as they are spending all of their time on their core activity; accounting. There is an increasing trend for accountants to be adding business finance as an add-on service, but it has been seen for many years as not something accountants wish to take on, due to the fact they usually will not accept commissions. So do try, but don’t expect that they will open the treasure chest!
6 Speak to business finance lawyers
One group that is worth speaking to are lawyers. The one constant in any business finance process and agreement is the legals. Lawyers deal with finance houses all the time, and will know many that you do not. Search for specialist lawyers, ask them if they know good sources, and if they do, they get your legal business. If it is a property related transaction, I would highly recommend befriending valuers as well. They are the other constant in these situations, and are doing their valuations on behalf of...lenders. They will know a few as a result.
7 Ask your business owner friends
You may not want others to know you are looking for finance, but if it’s not a problem, ask your closest business friends. If you are a member of a network, or just have a lot of good contacts, ask them. Someone somewhere will have an interesting route for you.
8 Meet funding speakers at exhibitions
It is well worth the time going to exhibitions because again, some funders will be present who do not advertise. Don’t just take the names of those with exhibition stands. A good few funders will be present as speakers, and not have a stand necessarily.
9 Enlist the help of brokers
Brokers can be worth their weight in gold, particularly if you need help quickly. Brokers have built up an extensive network of contacts over a number of years, and the good ones will have some interesting non-advertising options.They know instantly which funders will look at your situation, and which won't. They can give you access quickly, having conducted all of the above over a number of years, and should be expert in helping you compare all the options once you compile them. They are a major time saver.
So the key here is to think laterally. It will take time to build up a network of contacts, so it useful to be conducting some of these activities even when you are not looking for funding. Take your time, be patient, and make sure you’re in a position to receive good news or intelligence on new market entrants as they happen. If you don’t have time to wait, the quickest road is always the broker.
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About Chris Davidson
Chris Davidson is Managing Director of Discover & Invest Ltd.
He believes passionately in providing businesses with market-leading financial insights that have a positive impact on the bottom line. As a result, Chris helps get the best rates and terms available at any one time.