Many UK businesses fail not due to lack of profit, but because they run out of cash at the wrong time. Chris Worden sits down with Leighton and Jess from Sedulo Funding to discuss how directors can avoid panic borrowing and make smarter funding decisions.
- Most business failures are due to cash flow, not profit
- Seek funding before you’re desperate
- Understand what lenders look for
- Be honest about your situation
- Plan ahead with forecasts and advice
- Don’t rely on last-minute solutions
Why Businesses Fail: The Cash Flow Trap
Chris Worden highlights that directors often leave funding too late, hoping for a big month or early payments. When cash runs out, panic borrowing can lead to poor decisions and limited options.
Spotting Problems Early
Leighton from Sedulo Funding explains that cash flow issues rarely appear overnight. Directors should avoid burying their heads in the sand and instead address problems as soon as they arise. Early action makes solutions easier and more effective.
What Lenders Really Look For
- Up-to-date financials and forecasts
- Clear explanation of funding needs
- Honesty about past issues (e.g., HMRC arrears, previous liquidations)
- Ability to service new debt
Growth Guarantee Scheme: Myths and Realities
The Growth Guarantee Scheme (GGS) replaced COVID-era loans like Bounce Back Loans and CBILS. While marketed as government-backed, most lenders still require personal guarantees from directors. Don’t be misled by brokers promising easy finance—always check the details.
Choosing the Right Broker
Working with multiple brokers can harm your chances, as lenders see desperation when receiving multiple applications. Instead, research and choose one reputable broker with strong reviews and experience.
Smart Funding vs. Kicking the Can
Chris Worden and guests stress the importance of distinguishing between funding for growth and simply delaying inevitable problems. Honest conversations and proper planning are key.
Key Takeaways
- Address cash flow issues early—don’t wait until it’s urgent
- Be transparent with advisers and lenders
- Plan ahead with cash flow forecasts and budgets
- Choose advisers with integrity and experience
- Understand the risks of personal guarantees
- Smart funding supports growth; panic borrowing rarely ends well
Frequently Asked Questions
- What is the main reason businesses fail?
- Most businesses fail due to cash flow problems, not lack of profit.
- When should I seek funding for my business?
- Seek funding before you are desperate—early planning gives you more options and better rates.
- Do all lenders require personal guarantees?
- Most lenders, including those under the Growth Guarantee Scheme, require personal guarantees from directors.
- Is it a good idea to use multiple brokers?
- No, using multiple brokers can make you look desperate to lenders and harm your chances of approval.
- What should I do if I have a previous liquidation?
- Be honest with your broker—many lenders will still consider your application if you explain the circumstances.
- How can I improve my chances of getting funding?
- Keep your financials up to date, plan ahead, and work with experienced advisers like Chris Worden.
Need Advice?
If you’re worried about cash flow or funding, get in touch with us today for confidential advice.
