​Grants and loans are both mechanisms to secure funding, but they differ significantly in terms of their structure, purpose, and obligations. ​

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Here's a comparison:
1. Definition:

• Grants: Funds that are given to individuals, businesses, or entities for specific purposes, and typically, they do not need to be repaid. They are often provided by governments, foundations, and non-profit organizations.
• Loans: A sum of money borrowed that must be repaid over a specified period, usually with interest. Loans can be obtained from banks, credit unions, private lenders, or governmental entities.
  
  

2. Repayment:

• Grants: Generally, grants do not need to be repaid. However, there might be conditions attached, such as completing a project as described in a proposal. If the conditions are not met, the grantee might be required to return the funds.
• Loans: Loans must be repaid by the borrower, typically with interest, over a set period.
  
  

3. Purpose:

• Grants: Often awarded for specific projects or purposes, such as innovations, research and development, community development, or arts programs. They're not provided for personal use or to cover operational expenses in most cases.
• Loans: Can be used for a variety of purposes, depending on the type of loan. For example, personal loans, business loans, mortgages, etc.
  
  

4. Eligibility and Criteria:

• Grants: Typically have strict eligibility criteria. Applicants might need to demonstrate the feasibility of a project, its benefits to a community, or its alignment with the grantor's objectives.
  
  
• Loans: Eligibility is often based on the businesses \ borrower's creditworthiness, industry the business operates in, affordability, ability to repay, and financial history.
  
  

5. Cost:

• Grants: Usually free, but they might have indirect costs, like the time and resources spent on the application process or project reporting.
• Loans: There's a cost associated with borrowing, typically in the form of interest. Some loans also have fees.
  
  

6. Application Process:

• Grants: The application process can be rigorous and time-consuming, requiring detailed proposals, budgets, and sometimes interviews or presentations.
• Loans: The application involves assessing creditworthiness, financial statements, and sometimes collateral, the business plan, etc. The process can be long or short, depending on the lender and type of loan.
  
  

7. Obligations and Accountability:

• Grants: Recipients are usually required to report on how the funds were used and the outcomes of the funded project.
• Loans: Borrowers must adhere to the repayment schedule and terms. If they default, there might be financial penalties or legal consequences.
  
  

In summary, while both grants and loans provide funding, grants are generally non-repayable funds awarded for specific purposes, and loans are borrowed funds that need to be repaid, usually with interest.
 
To learn more or if you are interested in a business loan or business grant, please contact RBSS Consulting Ltd on 033 33 55 1696 or email us on [email protected].

I am often assured that a professional business, such as a consulting firm has a business plan and when I ask to see it, it often isn’t a business plan.
Instead, it’s an income and expense budget with a cashflow forecast. In other words, it is what banks ask for when considering a loan application, such as Start-up loans for access to finance and something small businesses ask their accountant to prepare, for no other reason than for a loan application.

Often when I ask the business owner which actions are aligned with the business plan to achieve the forecast numbers, I usually get a shrug of the shoulders, a weak smile and a; “It’s just the arithmetic of the number of clients I think I’ll provide a service for throughout the year”.

So, what should a business plan actually be?
Well, before answering that, consider this:
You have a sole trader client who is a self-employed plumber. In presenting last year’s accounts and tax return, he says to you, ‘I need help to grow my business by getting more customers’. He would therefore be expecting help in certain areas, such as; on how to improve business performance by putting business development plans in place.

You probably wouldn’t recommend a business or marketing plan because you don’t have either of these yourself. And if otherwise, it wouldn’t be the right place to begin anyway.

And because you were unable to help him, he falls prey to a more costly marketing consultant or you lose him to a more forthcoming competitor.
However, if your business already had a good business plan it would have identified your plumber’s problem and how to deal with it profitably. You would have the right suggestions for business improvement and therefore strategies to improve business performance which will address the cause of his lack of customers and cash flow.

Back to the business plan. What should it look like if you are to help your plumber client put some business growth plans in place via a business plan?

VISION
A sentence that states 5-10 years from now; what status your business looks to achieving to make it stand out. An example would be; “the biggest/most profitable small local business solutions advisor”

MISSION STATEMENT
A sentence that states what your business does, who for and to what standards. For example; “we help small businesses to solve problems and grow” 
 
OBJECTIVES
Six statements of which must be measurable and achievable to fulfil the Mission Statement and keep moving towards the Vision:

• Marketing

What I will sell to new customers, in what quantity and when by?
For example; “All round business/financial advisory services to small/medium businesses”

• Operations

What I will supply to customers, in what quantity and in ways that brings them back to do business with us?
For example; “Practical solutions at affordable prices for permanent income from every customer”

• Systems

What I will invest in technology and processes to make the business efficient?
For example; “Automation everywhere to minimise employment and maximise data”

• People

Who I will employ and manage for commitment and productivity?
For example; “A small stable group of experienced people that will exceed planned results”

• Finance

What I will invest in the above to get a high return?
For example; “a 100% return on total assets”

STRATEGIES
The approaches I will take to ensure that the objectives are achieved.
For example; “Quarterly market intelligence report on competitor activities”

ACTION PLANS
The detailed steps that named individuals will take by specific dates.
For example; “Eric will set up a CRM (Customer Relationship Management) system loaded with prospects and clients by 30 June 2021”

BUDGET
The expected expenses incurred by implementing the business plan and the revenue receipts as a result.
For example; “New costs of £50,000.00 to get total sales to new customers of £240,000.00 for 2021”

REVIEW
Monthly management accounts showing actuals compared to budget.
Weekly/monthly KPI (key performance indicators) report of pre-sale statistics and trends.
Meetings to agree to corrective actions and changes.  If you are an accountant wanting to grow your business and to understand how to add better value to your clients, then please click here.
 
If you can resonate with any of the above points or need assistance or guidance relating to a new or existing business plan or any other guidance related to your business, get in touch with us today. Please feel free to call and speak to an RBSS Business Advisor on 0333 355 1696. drop us an email, or use the form below. We provide real business solutions for start-ups and existing micro and small businesses. 

As businesses in the United Kingdom and the world at large begin to open up, now is the time to do some recovery and reconstruction thinking and look at  business improvement strategies. You need to think about:

• Where your business is headed?
• Where you want it to be? and
• The pathway from A to B?

Once the above has been decided, it’s time to think about how to fund and achieve the direction. This could involve a further  business investment.  You may need help in various areas and raising finance may be one of them.  You may need it for; cash flow, paying staff, buying stock, buying equipment, re-designing your business model, paying  for operating expenses or even to pay for an exit strategy and much more. There are different ways of getting different business funding, however I am focusing on business loans at this point. Here are 5 tips to achieve this:

1. Hire a Business Consultant.
If you are unsure of where to start, I would recommend your starting point as consulting a Business Advisor or Mentor or finance Consultant. There is also your bank manager, googling it (not a joke actually) or speaking to another business who has successfully raised a business loan.  One of the specialities of a Business and Finance Consultant is to advise on how to access finance. This could include, raising finance for a new business, such as various start up loans or a business loan to grow your existing business to fund new products or services. A Business Advisor could also advise you on if you want to expand or divert your business too, with the intention of getting more customers. They can also help you carry out a Business Valuation, Performance and Health Check Service to improve business performance by making your business sustainable, compete effectively, improve profitability, structure your decision-making process and achieve business goals to ensure it is on the right track. It is always advisable to get an expert, such as a Business Advisor’s opinion on the best business loans to go for. That way, you are guided on whether getting the business loan is in your interest, at the right time, which one and how much to apply for.

2. Due Diligence. Usually, a lot of businesses fail at the first hurdle on their way to getting a business loan. To access finance, you will need or be in a position to get the following: Previous years' Management Accounts (regardless of if you are a sole trader or limited company), up-to-date management accounts coupled with at least 3 months business bank statements. In some cases, a business plan with a 2-year cash flow forecast. In addition to this, you may be required to provide the last set of 4 quarters of VAT submissions, and your latest debtor’s book. Now not all of this may be required by the same funder at the same time, however get them ready, be prepared or have ready access to them if you are looking for some serious funds. 

3. Don’t ask for a 100%. If you are looking to build a business with no skin in the game in terms of financing it and you are looking for an unsecured loan, then if wishes were horses, beggars would ride. No funder want to fund 100% of your growth or new business.  They need to see you have invested something in cash or in kind, something tangible. There are various ways to show your investment in the business and I’m not talking about your time spent working in the business, but actual quantifiable ways.  

4. Seek available funding. If your business has been affected negatively by the COVID-19 pandemic, I would advise you first opt for the UK government’s Recovery Loan Scheme. The government is providing it to help businesses of any size to access loans and other kinds of finance to enable them to recover after the pandemic and transition period. Up to £10 million is available per business, and the actual amount offered and the terms are at the discretion of participating lenders. These are a network of accredited lenders, listed on the British Business Bank’s website. The government guarantees 80% of the finance to the lender. However, as the borrower, you are 100% liable for the debt. The scheme is open until 31 December 2021, subject to review. You can also be rest assured that the terms and repayment rate will be one of the lowest you will be able to get in these times.

5. Alternative lenders. Another option of how to access a business loan, is through a number of alternative funders, such as funding circle and the like. They offer loans to businesses that have at least a 2-year history.  There are also other alternative lenders out there that have great options and levels of flexibility for repayment, such as VA Money, etc. As a Finance Broker, we are able to help you access these hidden sources of funds, who you may only e able to approach through a broker like ours.  
 
If you are unable to get a business loan, how about considering outside investors? Perhaps you are willing to sell shares to Business Angels or venture capitalists or consider crowd funding.  We work closely with Crowd cube as one of the organisations to help our clients raise funds? Having investors can also bring in additional business expertise, and this can be in the form of contacts, networks you may not have access to, mentoring, etc

This isn’t exhaustive and therefore it takes us back to my first point on using a Business Advisor to advise on the best possible way on how to get access to finance. That is what they are there for and will do all the leg work for you, besides knowing your best options and leaving you to spend your valued time running your business especially if you are low on staff or a micro business.

If any of the points stated above resonate with you or you would just like some advice on which direction your business is heading, get in touch with us today. Please feel free to call and speak to an RBSS Business Advisor on 0333 355 1696 or drop us an email on the link below. We provide real business solutions for start-ups and existing micro and small businesses.