Growing your business is one of the most exciting, yet challenging, things an entrepreneur will ever do. But when a business loan application is rejected, this can put a massive road block on expansion and growth plans.
Alternatively, being too afraid to take out business finance either due to a poor credit score or fear of repayments can be just as limiting.
Luckily, in either case, there are still ways to get expansion plans off the ground and achieve that brilliant idea plus increased turnover. Here are four daring entrepreneurs who turned rejection from a bank around and achieved great things with their alternative finance.
1. Valley Cruises, Canal Boat Holiday Hire
Valley Cruises is a family operated boat hire company with sites at Stratford upon Avon and Coventry. The business allows holidaymakers to hire luxury narrowboats to cruise the British canals. Their fleet come in all shapes and sizes with personal touches for a unique and comfortable experience.
Recently, the business has rapidly expanded to keep up with growing demand and interest in narrowboat hire. However, when the business took on a second location with a 50 mile stretch of lock-free canal, this presented the owner with an opportunity to do something more original than simply adding more boats to the fleet.
Although narrowboating has enjoyed a renewed interest from people of all ages, many are put off by not feeling confident when operating the locks. So, in order to attract these people to the canals too, Valley Cruises decided to seek alternative finance in the form of a business cash advance to purchase a boat that could be hired out for parties and day events.
A business cash advance is a form of funding that is paid back as a small percentage from your customer card transactions. So you only ever pay back your loan when your customers pay you. So if business is booming, you’ll pay it back quicker, or if you’re having a quiet period, you’ll pay back less that month.
Unlike bank loans there are no fixed monthly repayments, APR or hidden fees. Plus, the loan is unsecured so your home won’t ever be at risk, which was the ideal option for Valley Cruises, who wanted to purchase another boat but not borrow against his fleet of existing canal boats. This type of lending made it possible for the business to purchase another boat but to use it for a different purpose.
The popularity of the day hire concept has been so well received, that David Moore, managing director, has said that in several months’ time, they are looking to purchase another holiday hire boat to support even further growth of their business.
2. Exotic Palms & Spas, Retailer
Based in Gillingham, Exotic Palms & Spas. has been operating for 15 years and sells 14 different types of hot tubs, saunas, gazebos and barbeques. They also provide a hot tub cleaning and repairs service.
The business is dedicated to offering high end products to their customer base, including specific hydrotherapy hot tubs, designed by chiropractic engineers. These products are incredibly beneficial in helping to support the healing of the body, bones and spine, so one would naturally assume that a cash injection would be used to acquire more products.
However, business owner, Chris Whitton, used alternative finance to redesign and refit their showroom so they could showcase the high quality of their products to potential clients. Their redesign features a striking, wall to wall, mural of celebrities and famous people across the years which add a luxurious and unique backdrop to the environment of the product range.
Such a venture is not immediately seen as a viable funding option for traditional lenders, but utilising an alternative finance source has allowed for such a unique project to be fulfilled and which has a positive impact on both the sales and working environment of the business.
3. Ivory Wardrobe, Wedding Dress Retailer
The Ivory Wardrobe is an independent wedding boutique located in Woburn Sands, Buckinghamshire. The business has been running for 30 years, with the current owner, Laura Buckingham-Brown, taking the reins in 2010 and rebranding the store, and undergoing extensive refurbishment.
In recent times, more couples are choosing to get married which has meant that business is booming. This has led wedding boutiques to stock even more product. However, the nature of the purchasing process in the wedding retail sector can cause significant cash flow challenges. For example, sample dresses are usually brought twice a year to meet the six month lead time from order to delivery. Laura purchases her dresses in March and September and this requires significant cash outlays twice a year ranging from £5,000 – £10,000 each time to ensure she has seasonal samples to meet her customers’ expectations.
By acquiring a business cash advance, Laura has been able to invest in more stock including the latest designs as well as original dresses for her brides to be. Traditional business lenders don’t usually approve finance for things like additional stock, but in this instance, alternative finance has helped to boost Laura’s business through the mainstay of her offering.
4. Foam, Bar Restaurant
Laura Howells had initially ran a successful bar restaurant at a marina, but soon faced a common problem like many other business owners when it comes to expansion; a lack of space. The constraints of the kitchen’s size meant that Laura could not scale up the enterprise nor develop the menu.
But when a former office building on the seafront became available for rent, Laura jumped at the opportunity and set about getting planning consent for change of use. Following 12 weeks of extensive building works, internal alterations and interior design, all financed by a family investment of over £100,000, Foam opened for business in June, 2014.
Due to its instant popularity, Laura and her family decided to expand and build a glass-walled room to better utilise the seaward facing patio. This led to the restaurant quickly tripling covers from 46 to 130. A few months later, the coffee station outside was replaced with a specially designed café bar which transforms to a full restaurant bar at night.
Although the landlord agreed to add the cost of the ‘Glassroom’ extension to the rent, all other costs like kitting out the space fell to Laura, creating a need for significant financial investment. But even though Laura had been declined for a start-up loan in the business’ first year –despite the significant personal finance already invested and the business’ ongoing success – Laura wasn’t deterred, utilising a business cash advance to aid growth.
So whilst the initial refit and expansion had been funded by Laura and her family, continuing to finance the upgrade with things like furniture, fittings and equipment, normal business fluctuations still needed to be covered in order to continue to grow the business in line with ongoing demand. This alternative line of finance allowed the business to continue to improve their offering alongside meeting the needs of business operations.
Deciding to take out finance proved to be a profitable move as Foam’s turnover has increased substantially, year on year. Since the Glassroom has been in use, the business has diversified to include private functions, tapas nights and live music events, none of which would have been possible without the expansion of the premises. Foam is now open seven days and six evenings a week and continues to receive great reviews.