Business financing advice

I want to expand my company, im a sole trader at present.

My question is would it be better to finance it myself ( i have savings) or is it worthwhile or adventageous to use finance? Loan etc.?

I need 20k ish

If you have your own £20k use that – why pay interest if you don’t have to?

Just make sure it is accounted for as your own investment into the company so you don’t get taxed on it in the future when you draw it back out.

EDIT: If you wanted to borrow £20k, the lenders would want security (ie your house). Would you be prepared to lose that if they came knocking?

EDIT: If you wanted to borrow £20k, the lenders would want security (ie your house). Would you be prepared to lose that if they came knocking?

+1

I was just about to say this!

Choice is possibly lose savings, or lose house if things go wrong. At least with using savings you can use what you need at the time, or do you need to spend 20k in one hit?

And are you likely to create any new jobs? There may be local grants available if so.

Yes i will probably need 2 new people, but wont a grant be like a loan?

Loans are reepayable, grants are for specificitems or staff and training.

Try Buisness link for more info

Business link no longer exists 😥

Also look at Government schemes for taking on young people (if that fits your requirement) where costs can be offset against various tax benefits and so on. I know absolutely nothing about this myself first hand though so you’d need to do some research.

Such as this…

https://www.gov.uk/government/collections/helping-young-people-into-work

Your local chamber of commerce may be able to point you in the right direction then. It’s worth a call.

Business link no longer exists

or whatever the government funded agency is called now then.

https://www.gov.uk/business-finance-support-finder

Depends what you want to spend the 20k on. Staff, stock, equipment, promotion ???

What will the expansion result in, cash flow, profit, elimination of the competition, securing future customers, tying in existing ones etc ???

Dont ask a bunch of mountain bikers, go and ask a few proffesionals.

Ones who dont stand to gain by you borrowing money.

Depends what you want to spend the 20k on. Staff, stock, equipment, promotion ???

What will the expansion result in, cash flow, profit, elimination of the competition, securing future customers, tying in existing ones etc ???

Dont ask a bunch of mountain bikers, go and ask a few proffesionals.

Ones who dont stand to gain by you borrowing money.

I intend to, chamber of commerce sounds like a plan.

Thanks for all replies

As your a sole trader any loan you’re liable for if the business goes under. The interest is out of your profit/earnings so using your own cash makes more sense. You’ve not really gone into what you need the money for so hard to advice.
As a sole trader you will struggle for grants and apprentices. You may want to think about going limited as your turnover and hopefully profits will be higher so the tax savings will be beneficial. As the company would be separate to yourself you would be entertained for grants as the accounts would be compiled and formatted under accounting standards so they can see where their grant has been used instead of going instead been used for working capital. Apprentices is the same with many organisations not entertaining sole traders.
Work on a business plan for what your wanting to do paying attention to the cash flow projections, you may find you don’t need to introduce as much money as you need with extra income from the expansion.
If you need machinery look into leases where you can upgrade to a better machine as demand requires so you are not financing extra capacity/capability that you have no requirement for until much later so wasting cash.