Firms should not rush to borrow money - expert

Businesses should not rush into borrowing money until they are certain they are ready to do so.

That 's the view of Guy Bridge (pictured), chief executive of London-based business financier Finpoint, Greater Birmingham Chambers of Commerce 's preferred finance hub partner.

He said too many businesses were rushed into taking out loans, and there was a great deal of 'misinformation ' in the marketplace by funders seeking to persuade loanees to sign on the dotted line.

He said: “When it comes to business funding, there is a lot of misinformation trying to encourage borrowing when you might not be ready to grow your business. Stability needs to come first.

“Spotting the need for investment will help alleviate short term pressures and can be the catalyst for driving your business on to better things.

“Once you know the time is right and you 've done all your preparation, it 's time to start looking at your finance options, and matching them to your needs.

“Getting a business loan can sound simple - but making sense of finance options can be overwhelming, especially if you don 't know what would be the best fit for your business. ”

“Before looking for external capital, you should make sure you 're managing cash effectively. Being able to demonstrate good cash management sends out the right signals to potential investors or lenders. Preparing a solid business plan is the key to securing funding.

“Don 't rush into taking out a loan. Some providers might try to encourage you to take that step before you 're ready.

“There 's a lot of choices and a lot of competition out there, so make sure you 're being advised fairly and honestly - especially when it comes to fees.

“Have the relevant documentation ready such as last two years filed company accounts, up-to-date management accounts, last three to six months of business bank statements, and a clear purpose for the borrowing. ”

To see if Finpoint can support your business, click here