For many businesses, growth or expansion during the current economic downturn is merely a pipe dream. The priority for hundreds of local small to medium sized businesses is simply survival. Yet, if you, as a business owner, are in the enviable position of looking to expand, how can you ensure you have the best possible chance of raising finance at a time when banks are notoriously refusing to offer funding?

Mark Craddock, Partner at the Stourbridge office of Midlands accountancy firm Baldwins, which regularly advises clients on how to win favour with banks, comments:

“Whether you’re looking to grow, acquire other businesses or break into new markets, there are a number of options you can explore. Everyone knows it’s very difficult to get money from banks at the moment which will hopefully change as the Government puts added pressure on them to increase lending to SMEs. Until that happens, don’t lose hope – banks will still lend if it appears to be a viable business proposition with some return for them. You’re more likely to get a yes from the bank if you’re very savvy when putting together a comprehensive and robust business plan with which to approach your bank manager. However tough it may be, this route is still the one favoured by two thirds of UK businesses.

“First of all, ask yourself, are you in the best position to pitch for more funding? Is there anything else you should do first – confirm some more contracts, win new customers or market your business to create some excitement? Then look closely at the sector you’re in – is it one that’s bucking the trend or at least on an upward turn? If you can show you’re in a strong position, relatively unaffected by the recent recession or even better, able to take advantage of tough times, then that’s a big plus point. If your business is healthy, making money or you have other assets, then say so.

“Be able to demonstrate that you’re a good manager, with a strong sense of direction and a good team behind you. Show creativity with resources and money – and explain that you will use any funding in an efficient way. Clarify why you need the amount you do and appreciate that the bank will want to know how they will get their money back, even if it all goes wrong. More and more business owners are unwilling to put their homes up as collateral, so what else can you offer or are you prepared to negotiate?

“Other options for funding come from family or friends, a second mortgage, business angels or grants. We work with businesses to look at the most viable avenues to ensure healthy cash flows and balance sheets.

“For example, if a business sits within one of the Governments Enterprise Zones, then there are savings available. For new businesses, the Government if offering employee National Insurance holidays for up to five years. There are also research and development credits available and although drying up, some grants are still available to those that qualify.”

Mark, who became a Partner at Baldwins at just 31, is passionate about helping local firms grow.

“This area is full of businesses with exciting future prospects,” he adds. “It’s extremely frustrating to hear that so many are being refused finance by banks which are failing to meet their lending targets. SMEs are critical to the full recovery of our economy and I am determined that we must do everything we can to help firms in the area secure finance when they need it.

“I’ve worked for one of the UK’s largest accountancy practices in the past and assisted global corporations in their audit and tax planning. However, it’s the small to medium sized local business owner – or entrepreneur trying to come up with the means to launch a new venture – who is really close to my heart. I admire their dedication and determination to succeed and let’s face it, those still in business today are already doing well. With financial assistance they could be expanding to be one of the big players of tomorrow. That would be great news not just for Stourbridge and the surrounding area but for the economy overall.”