Busting the finance myths that hold firms back

Money myths spread fast. We hear the same ones week after week from senior teams from solid firms who feel stuck because of something they were told years ago. Most of these views come from rumours, out-of-date bank rules or stories passed on by people who never used the products themselves. Here are the ones we hear most and the truth behind them.

Invoice finance is only for struggling firms

Absolutely not.  This old myth comes from the days when invoice finance was seen as a last resort. That is not how it works now. Most of the firms we place are growing fast, taking on new orders or needing more headroom. They use invoice finance to smooth cash flow so they can buy stock, bring in staff or take on larger projects. Lenders judge the strength of the debt, not the drama around it, which is why it suits both steady and fast-moving firms.

Banks always offer the best funding deal

If this were true, we (and so many of the lenders in the market) wouldn’t be here.  Don’t get us wrong, banks can be great when the fit is right but they have tight rules and long checks. They also re-price more than people think. We see many firms that get turned down because the bank just isn’t funding ‘that type of deal’ anymore. Independent lenders can be quicker, more open and less rigid on structure. A ‘bank rate is best’ mindset can lead you to miss better options.

Loans really damage your balance sheet or stop you from growing

Hmmmm. A well-planned loan can support growth, not stop it. The fear seems to come from owners who saw old-style loans loaded with fees and heavy security. The market today is different. Loans can be short, sharp and shaped around your trade. When used with care, they help firms take the next step without starving cash flow.

Alternative funding is only for firms that can’t get help from a bank

No this isn’t true. Many of the strongest firms we work with use alternative lenders by choice. They want speed, a clear process and terms shaped around how they trade. Some want a higher line than the bank will give. Others want a lender that looks at the whole story, not just a score on a screen. The word ‘alternative’ puts people off but these lenders are now mainstream.

Using a broker means paying more or being pushed into one product

A good broker does the opposite – it widens your choices. At Evolve, our support is fee free for clients and we look at the whole market, not one small group of lenders. A broker should shape the deal around you and work with lenders who want your trade. If a broker is pushing one product, you’re talking to the wrong one.

Invoice finance is harder to manage than a loan or overdraft

Not anymore. The systems behind it are a thousand times better than they used to be. You can upload invoices in minutes and draw down the same day. Many clients tell us it takes less effort than checking their banking app. And unlike an overdraft, your line grows with your sales instead of staying fixed.

Short-term cashflow loans are risky or a sign of poor trading

Let’s look at this properly.  A short loan is risky when it is taken in panic with no plan. When used for the right reason, it can give firms the room to handle a spike in work or a long payment cycle. We recently placed a loan for a business that had just won a large order but needed cash to staff the project. Without it, they would have turned the job down. With it, they hired, delivered and now trade at a higher level.

Securing funding means giving up control of your business

No, no and no again.  A lot of owners fear lenders will step in and tell them how to run things. That is not how most products work. With ABL, invoice finance, loans and trade facilities, the business stays firmly in control. What lenders want is clarity, not control. A well-structured deal can give you more freedom, not less.

If you move funders, your old funder will refuse to take you back

This is one of the most dated myths still doing the rounds. If you heard this from your parents, you’re not alone.  Lots of people in the past worried that leaving a lender is ‘disloyal’ and that they’ll never be welcomed back. It’s not true. Lenders know clients move for all sorts of reasons: price, service, structure, support. If you return later with stronger trade or a better fit for their appetite, they’ll look at you again. It’s business, not a breakup.

There is plenty of old noise in the market and it holds good firms back. If you want straight answers, a fresh set of eyes or someone to sense-check the deal you have, we’re here. Funding should help you move up, not trip you up. To talk things through, contact Stef Radymski or Nilima Begum. We’re always here to help!