From time to time, a business needs a cash injection. With so many lenders offering a dizzying array of products, it can be difficult to know what to choose.

There are plenty of different types of business finance but before diving in and applying, it’s important to understand your requirements first so that a loan can be matched to your needs and so that you can potentially avoid the problem in the future.

“Do your homework first because if you don’t, you’re going to buy the wrong product,” says the team at Smartline Rockingham. “There are hundreds of ways of getting the money but you’ve got to match those with the purpose.”

The consequences of choosing the wrong finance product include paying too much for finance or ending up with a loan that simply isn’t fit for the purpose – in this case, it may make a problem worse, rather than solving it.

“It comes down to finding out what your real issue is,” says the team at Smartline Rockingham. Work out how long it will take to repay the amount you need to borrow, whether the repayments will impact the business, what has caused the shortfall and whether you need to take any other action.

“A lot of people in need of short-term debt might not be invoicing properly or collecting their debts properly,” says the team.

Finally, make sure you talk to someone experienced before talking to bank staff, who may not have specialist knowledge of small businesses or a good understanding of your business and its needs.

Rather than asking friends what they think, Smartline Rockingham suggests speaking to an accountant, financial planner or broker first.

Find us at Smartline Rockingham, who specialises in business and commercial lending.