By Rob Warlow, Business Loan Services

Talk to most established business owners and they’ll undoubtedly have a tale to tell about getting finance from a bank. So, if someone with an existing business is struggling to get a bank to say ‘yes’, what hope does an aspiring entrepreneur have?

So, assuming the banks are off limits, or already have said no to you, what sources can you access to get the finance you need?


The obvious starting point. If you were employed prior to going it alone hopefully you have been able to set aside some spare cash. This can either be in the form of ‘hard’ cash in a savings account or held in shares and unit trusts. Starting a business off with no debt is the best start you can get.

If you have a clear start-up deadline set a goal to save the specific amount of cash you’ll require. Knowing you need to save to get your business off the ground ensures you don’t spend much need future capital on unnecessary items.

Stay in Your Job Longer

If you don’t have enough cash put aside consider staying in your job longer to give you sufficient time to save more. This assumes of course that you have not received a shock and unplanned for exit from your job. Staying on longer may not be what you want but better to do this than start off your new venture undercapitalised.

The type of business you wish to be in could lend itself to you keeping the day job while working on establishing the business during the evenings and weekends. This has two benefits, firstly, you are still earning thereby allowing more time to build up a cash reserve and secondly, it’s an opportunity to test out your idea and the market.

Family and Friends

If you are in the early planning stages start drip feeding your ideas to family and friends whom you think are likely to support you. Tell them your ideas, share your ambitions and goals; get them sold on you and your future business.

Once you are ready to start asking for contributions hold an Investor Evening or circulate your Business Plan. Outline the investment opportunity and say what their return will be. With savings interest rates at an all time low many people are looking for better places to invest their money.

Whilst these investors are people who know you and so are more likely to trust you, don’t forget that you are developing a very different relationship which can quickly turn sour. Be prepared for rocky times!

Mortgage or Equity Release

If you have owned a house for many years you may have built up equity which can be released via a mortgage to provide your start up capital. The interest rate will be lower than traditional bank finance and, as the repayments are spread over a longer period, the monthly repayment is likely to be manageable from a cashflow perspective.

The disadvantage of raising cash this way is that your home is potentially at risk. If meeting the monthly repayments is dependent on what the business can generate then a slow start could cause cash problems.

If you are planning to take this route here’s a tip – apply for the mortgage, or top-up, whilst you are still employed. Once you are self-employed proving your income is more difficult and as start up it’s almost impossible to do.

Business Grants

Business grants are now few and far between but in your county or region there may be grants available for specific industries, and sectors. Grant providers will usually only give a portion of your requirement, so they cannot be used to totally finance a start up. You are likely to find nominal financial support for marketing or website development.

Business Angels

Business Angels are usually retired business people who are looking for opportunities to invest in new businesses.

In exchange for their investment they will want a shareholding and perhaps some hands-on involvement. They will bring vast business experience and so are useful people to have on board.

You can find an angel by going to the British Business Angels Association website – www.bbaa.org.uk

Credit Cards

A last resort is drawing on your credit cards. You’d be surprised how many business owners I have met who started out this way but, be wary! Credit cards are the most expensive form of debt and you have to be disciplined in paying them off. But, if you need a cash lump sum to kick start the business and you know you can pay it off within a few months, then it’s an alternative source of finance worth considering.

Getting finance for your new business other than going to your bank is possible; you just need to be creative and willing to spend time on the search.

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