Funding decisions businesses regret (and what they’d do differently)

When business owners are busy, tired and trying to keep everything going, it’s easy to make a ‘less than ideal’ funding decision. The work is coming in, staff need to be paid and suppliers want cash up front. At this point, funding can feel like a quick fix. Then six months later, people look back and say, “I wish I’d done that sooner” or “I wish I’d asked one more question before I signed on the dotted line.”

What makes business owners wait too long before looking for funding?

Sales seem good. The team is busy. The bank balance is OK: perhaps not great but it’s not terrible by any means. Owners keep telling themselves they’ll look for funding after the next big invoice lands or once the next job finishes. What they don’t realise is that funding still takes time. Even when a lender moves fast, you still need numbers, paperwork and have someone take a proper look at your situation.

What are the early signs that ‘we’re fine for now’ is turning into something more pressing?

It often starts in small ways. You start paying bills on the last day. You put off hiring someone you really need. You stop ordering stock in bulk because you want to keep hold of cash. You take on more work but feel less in control. None of this means the business is in trouble. It just means the timing is off, making every day feel like hard work.

Why do so many firms take the fastest money available, even when it’s not the right fit?

Because when you’re under pressure, you want to get a solution as quickly as you can.  And in these situations, the first “yes” is hard to ignore, especially if you’ve already been declined before. A fast offer can feel like the pressure is easing. The issue is that fast money often costs more because it’s available quickly. It can also come with terms that don’t match how your firm trades, like short payback periods or limits that don’t move as you grow.

What can ‘quick cash’ cost you later on in fees, stress and restricted options?

A deal that takes too much cash out each week can make day-to-day work feel tight, even when you are busy. You end up moving money between accounts on a Friday afternoon. You start hoping that one invoice lands before payroll. It can lead to juggling payments, stretching suppliers or holding off on spending that would help you work faster. We’ve seen cases where the loan itself wasn’t the issue. The way it was set up was the problem.

How do you spot a funder who won’t be able to support your next stage of growth?

A simple test is this: will they still back you when you need more? Some funders are great at getting you started but don’t have the space to grow with you. Others are fine until your turnover jumps, you win a bigger contract or you need more stock. It’s worth looking for a funder that understands your trade cycle, not one that goes quiet when things get busy.

What should a funding facility be able to handle as a business scales?

You may add staff, increase wages, buy more stock, take on bigger clients with longer payment terms. Some firms also hit seasonal swings where cash dips even when sales are strong. A good facility should flex with that, giving give you some breathing space.

What does a simple cashflow stress test look like before you say yes to growth?

It’s just asking a few basic questions. What happens if a key client pays 30 days late? What if a supplier wants cash up front? What if you need to hire two people sooner than planned? What if the next project needs more stock than the last one? If one delay would leave you struggling, you probably need more headroom before you take on more work.

If you could go back to six months ago, what funding move would have made the biggest difference?

Most people say the same thing: they would have acted earlier. Not when the bank balance hit red, but when it started feeling tight. They would have asked for a second opinion. They would have checked whether the deal on the table matched how the business actually operates.

If you’re about to sign something and want a second pair of eyes, give  Stef Radymski or Nilima Begum a shout.