Prior to looking for funding you need to be clear on what you want the money for. Will you use it for staff, equipment, premises or something else? Exactly how much will these things cost? How will having the money improve your profitability and cash flow? Can you clearly show how and when it will be paid back if it is a loan?
If you haven’t got these answers you may not get very far.
Business Angels tend to be people who have made their money through investing in other businesses so may offer their experience as well as looking for an opportunity to invest their money. Business Angel funding tends to be around £100,000 to £500,000
Crowdfunding has become more widespread and popular and is a way of financing that enables others to invest a small amount of money in a business. If a business is looking for investment it is usually matched with potential investors online via crowdfunding platforms such as www.ukcfa.org.uk.
Start Up Loans
Businesses up to 24 months old can apply for a Government backed personal Start Up Loan of up to £25,000 The average loan granted from the Start Up Loan is £6,000
With the current interest rate being so low, savers are turning to other ways to get a better return on investment. Peer-to-Peer lending has grown massively in recent years. Your business ‘advertises’ itself on an internet based platform to investors, who indicate if they are interested and how much they are willing to invest.
Factoring and invoice discounting are alternative ways that enable a business to get a cash advance against any invoiced sales that have been issued under credit terms. A benefit is that the business receives the cash without having to wait for its clients to pay their invoices. This can be very helpful when a business is growing and needs to maintain a positive cash flow.
Leasing and Asset Finance
Leasing or renting assets could save you spending large amounts of money initially versus the costs of buying outright, for example, office equipment, machinery or vehicles. There are advantages and disadvantages to consider, one advantage could be that the equipment leased is far better than the one you could have afforded to buy. A disadvantage to consider is it that it could end up costing more than buying outright.
By Greg Thomas, director of MiVentures