The new year threatens a perfect storm of financial pressures for SMEs. The Swoop Team are in lighthouse mode to help you quickly find your way to safer waters
At the first meeting back in the New Year, the Swoop team each brought along the big issue that we felt would be affecting SME owners.
The first on the table was the regulatory changes to imports from the EU, deferred from last year. Any business that didn’t have the process in place would be playing catch up – a serious headache.
Another colleague said that everyone would be affected by the VAT bill at the end of January: for many, it’s the biggest bill of the year and finding the cash to cover it can deprive a business of funds to cover other important bills or purchases.
What about CBILS? A third colleague pointed out that many of those who had taken out a CBILS loan were finding their payment holiday had ended. The first few payments could come as a nasty surprise at a bad time. “Yes,” said another colleague, “right as energy bills are going through the roof.”
Business owners could be forgiven for thinking that right now, they are being pulled into a perfect storm. Whether or not you’ve had a lacklustre Christmas, the outgoings are stacking up and it feels as though optimism is thin on the ground just now.
How can Swoop help?
Swoop helps SMEs find the funding they need across grants, finance and equity. Matching each customer to the right product is essential for us as we have been in the shoes of SMEs ourselves and instinctively know that a good customer is one who doesn’t walk away feeling they have been mis-sold a product.
Swoop’s approach, combining expert knowledge with whole of market access to products and services, makes a huge difference to our customer’ financial health.
Compare, switch and save
Before bringing in more money, a business should always look at the outgoings to see where economies can be made.
“Too many businesses make the mistake of putting all their financial products in one place,” says Laura Taylor, Strategic Partnerships Assistant at Swoop. “A business may have a bank account at the same place as the founder’s personal account, for example. And they may use that account for foreign exchange. This is rarely the way to get the best deal possible.”
Laura recommends that business owners take a hard look at what their financial products are costing them and see if there are better deals on the market. In particular, Laura says that there are many businesses using bank accounts which are not suitable for their needs:
“Business bank accounts often come with different features that may or may not be useful. There is no ‘best’ bank because everyone has different needs. Businesses should find the one that works for them.”
Swoop makes comparing financial products easy: from business bank accounts to FX and energy providers, Swoop puts the knowledge into your hands and makes it easy to switch with a few clicks of the mouse.
“A grant can be a game changer for a business,” says Andrea Reynolds, Founder and CEO at Swoop.
“We are in a similar position to our customers, because we’ve built the company up from a good idea and grown it using grant funding along the way. But we haven’t forgotten what it’s like to look at the market and feel overwhelmed by the options.”
Grants are an excellent opportunity for businesses to get a cash boost for a specific project. Currently there is a particular emphasis on green technology, but the landscape is constantly changing with national and regional grants available. Andrea says:
“Grants have a lot of advantages, not least the fact that you don’t need to pay them back. The other good thing about them is that they are a PR opportunity. Swoop has raised £7.5million from one awarding body and we’re proud to put that in our marketing. Getting a grant also shows that you are doing something worthwhile as a business and if your goal is to raise venture capital, getting a grant is a mark in your favour.”
Finding the grants that are available can be time consuming, so Swoop has put them all in one place with a criteria checklist so you can quickly see whether your business or project qualifies. Andrea adds:
“The two things to remember about applying for grants is that first, regional grants are usually awarded on a first come first served basis. If you meet the eligibility criteria, don’t delay getting your application in. Second, grants usually require an element of matched funds. A business would be expected to finance the balance of a project, so you need to ensure you have the cashflow to make this feasible.”
Registering with Swoop will keep you alerted to new grants as they are made available, so ensure that you have signed up and check our updates.
Selling equity in your business is an established way to raise funds. Kerry Dwyer, Equity Account Manager at Swoop says that if this is a route you are considering, knowledge is power:
“Some businesses don’t know whether they are attractive investment opportunities or how to strengthen their pitch to investors. With the tax year ending in April, activity in this space is at a peak for the quarter, so now is a good time to explore which investors might be interested.”
Swoop’s Equity Team works with businesses to find the right investment, advising on pitch decks and making introductions to VCs and other investors. Kerry says that often her role is to show prospective businesses where they might be better raising a loan rather than selling equity unnecessarily and addressing the misconception that founders will lose control of their company:
“Investors are not interested in gaining control, in fact under the SEIS/EIS scheme the rules actually prohibit it. So while you are selling part of your business, control remains in your hands and I would put this out of your mind when considering whether equity or loans are the right decision for your company.”
If you have a number of loans that you are repaying, it may make sense to consolidate them into one catch-all product. Stuart Pawelczyk, Head of Commercial Mortgages at Swoop says that wrapping up a company’s debt into a single outgoing payment can make a lot of sense:
“A lot of business owners and property investors don’t realise that they can utilise the equity in the property assets they own to restructure existing debts. This is often a good way to restructure borrowings to reduce monthly payments and improve cashflow.”
Not all refinancing needs to be at the level of a mortgage: businesses that have reached the end of their CBILS payment holiday are considering how to manage their outgoings. Stuart says there are often better deals for those prepared to look:
“Awareness is the main thing we talk to people about at Swoop: many customers don’t know what their options are which leaves them either depressed because they don’t realise how much help is out there, or they are spending more money than they have to because they don’t know a better deal is there for the taking. If you have a commercial mortgage or a loan secured by property it is vital you review it with an independent specialist annually to make sure it is still the right solution for your business and to establish if there is a better option now available in the market.”
Whether you are considering a short term VAT loan, a long term mortgage or a solution that lies somewhere in the middle, the cost and availability of finance will usually come down to a company’s credit score. Stuart says:
“We have found that 90 percent of business owners don’t know their company credit score. It’s like a snapshot of your financial health and a check with Swoop will not negatively affect your credit score.”
Know the options available to solve your problems
Stuart makes a great point: knowing your options can be a powerful weapon to fight off despondency, especially at a time when there are so many issues that business owners need to contend with.
Swoop has been built to save you time, putting the information you need to run your business in one place. There are many problems facing businesses, but there are also many solutions and Swoop’s team is ready to help.
Andrea Reynolds says that every good business solves a problem:
“The problem we solve is that business owners don’t necessarily have the skills that we have when it comes to raising funds. Our job is to close the gap for people, empower them to make better decisions and find them what they need without wasting their time. Our software does a lot of heavy lifting and we have an experienced and expert team of people who really understand what it’s like when you’re up against it.”
If you have yet to start your journey with Swoop, sign up at swoopfunding.com and find out how you can manage your business finances better than ever before.