From high street retail units and lucrative e-commerce websites to large scale manufacturing and distribution outlets, each element brings its own unique set of financial demands and investment solutions.
At Capitalise, we work closely with lenders who specialise at financing businesses within the fashion industry and so we've compiled this handy reference guide to help you better understand the types of finance which could give your business the boost it needs.
Read on to learn more or create your Capitalise profile online today and compare lenders in as little as 3 minutes.
1. ASSET FINANCE
For SMEs working within the production, manufacture or distribution arm of the fashion sector, one of the biggest financial hurdles you're likely to face will be when it comes to purchasing or upgrading your existing machinery and equipment.
Whilst these essential tools and production machinery purchases are paramount to the continued success of your business, the large upfront costs can be a real headache for business owners, particularly during the early years of trading.
More and more fashion businesses are now turning to asset finance to help them along the way, ensuring that you'll still be able to access the assets you need without the burden of upfront costs or even ownership responsibilities.
You'll have the freedom to choose between hire purchase and lease hire agreements depending on your long term goals for owning the equipment and will even be able to upgrade the hired machinery over time to ensure you stay ahead of the competition.
2. PROPERTY FINANCE
Financing a property purchase or development within the fashion industry can be expensive business and finding a commercial property loan to enable these projects is key to their success.
Whether you're looking to permanently purchase or expand a fashion retail unit, warehouse, factory or even office space, there are a huge range of specialist lenders who operate within the property finance market.
3. TRADE FINANCE
One of the most frustrating challenges faced by SMEs within the fashion industry can be trying to upsize your customer base without putting additional strain on your cash flow.
You may have a received a far larger than normal purchase order from a prospective client, but are unable to fund the purchase of stock your textiles, supplier, design house or brand.
Trade finance provides funding directly to your supplier on your behalf, ensuring that you'll receive the materials or finished goods that your project needs to deliver the project and boost your revenues.
4. INVOICE FINANCE
In today's highly competitive fashion industry, small and medium sized businesses often find themselves having to offer lengthy invoice payment term to their clients in order to attract new orders.
Whilst this is great for your customer, it can have a detrimental affect on your readily available working capital leaving you unable to fulfil new orders or grow.
With invoice discounting, you'll be able to draw down capital from your raised invoices almost immediately. If you don't have an adequate credit control team in place, hand your entire sales ledger over to a third party who will manage this side of your operation through invoice factoring.
5. MERCHANT CASH ADVANCE
Do you take regular credit and debit card payments from your customers? If so, then consider a merchant cash advance to bring additional capital into your fashion business with repayments tied to card machine takings.
You'll be able to apply for a lump sum that could help you purchase additional stock, pay an unexpected HMRC bill or simply tide you over a sudden dip in business.
You won't have the pressure of fixed monthly repayments as a small percentage will simply be repaid each time you take a credit or debit card payment. They are ideal for those within the fashion business due to seasonal revenues which can fluctuate massively throughout the year.
6. WORKING CAPITAL FINANCE
Working capital is the lifeblood of any business and the fashion industry is no different. There are a number of working capital lenders on the UK market with specialist experience at providing this type of funding to those within the fashion industry.
It can be used to grow your business, expand your workforce, or even take care of essential day to day running costs.
7. REFINANCING
If you're in the fortunate position of already owning your fashion production equipment, machinery or property, then refinancing can be an excellent way to raise capital without a loss of equity.
Almost any of your existing assets can be bought from you by a finance partner, and you'll then be able to either hire the equipment back or repurchase the equipment with payments spread across a convenient number of months or years. You'll keep full use of the equipment, and raise a lump sum of capital in the process.
8. OUTSIDE INVESTMENT
If you're in a position where friends and family are happy to invest in your business then this may well be an option worth considering. They may agree to simply lend you the money, but for the vast majority of people sizeable investment is unlikely to come from this route.
Equity investors such as Angel Investors or Venture capitalists are always keen to hear new business ideas, particularly in the potentially lucrative world of fashion, but you'll ultimately need to highly scalable business model to make this happen.
Register your business profile with Capitalise today and compare lenders who specialise in providing financial support to those working across all facets of the fashion sector.
It takes just 3 minutes to set up and our intuitive platform will not only find lenders who are likely to accept you, but understand the unique financial demands of this highly specialist industry.
