You have a business idea, you're ready to put the wheels in motion, but you're struggling for finance - so where do you go from here?
You'll be glad to know that there are many ways to help finance your business - from crowdfunding, to bank loans. But where do you go from here?
Crowdfunding has grown in popularity in recent years and has helped many businesses kick start their venture easily. According to crowdfunding website, CrowdCube, it can be described as:
Crowdfunding is an alternative method of financing a business, which allows everyday investors, professionals and venture capitalists to invest as little or as much as they like, typically through an online platform.
So why has it become so popular, and how does it help businesses? Many businesses ask for a sum of money which it deems enough to fulfil what it's aiming to achieve. For example, a South Wales based company used CrowdCube to raise £400,000 to help kick start it's business, and exceeded it's target with over 150 investors. This helps spread the risk for those investing as they can chose to invest from as little as £5.
But it's not just for start-ups, as GripIt Fixings, from BBC's Dragons' Den, raised almost £2million to help expand it's business.
Normally the favourite for many businesses as grants aren't usually required to be paid back. There are normally conditions to which you must meet however, such as economic benefit, or creation of jobs. But finding a grant is relatively simply. The Gov UK web site has a useful grant finder (amongst other types of finance).
You can search for grants on the Gov UK web site here with ease.
Grants can usually be used for new equipment, machinery, or even marketing services. It can be a great way to help give you the push you need to start the business.
Loans, Overdrafts & Credit Cards
Everyone's aware of loans, overdrafts and credit cards, from your payday loans to your standard credit card. Certain types of loans can be useful to a business and can really give it the boost it needs. These can be a bit tough to get your hands on as you're normally required to have a solid business plan and usually a bit of history behind you too.
Since the recession, the banking industry has tightened it's belt on lending, but that doesn't mean you shouldn't look at these options. If you have a robust business plan, then it could very well go in your favour.
In some instances, if the business is new, it will take the director's history into consideration. If you have a good credit history, this may increase your chances of being accepted.
The thing to consider is how you would use the finance - an overdraft may be more of a benefit to you than a credit card, especially if you pay suppliers by bank transfer, whereas a credit card may be more of a use if you pay suppliers by card.
Further Reading & Research
As with anything, you should do your research before agreeing to any form of credit. Speak to your accountant, your bank manager and look online for the information you need to make an informed decision.
Some areas of the UK also have business forums or organisations that can help set you on the right path before agreeing to anything.
Some useful links:
- Gov UK: Starting a Business (Get Funding)
- Start Up Donut: Financing a Business
- Better Business Finance
- Gov UK: Finance Finder
The Company Wizard is not affiliated to any web sites mentioned or linked to above. Any external links are beyond the control of The Company Wizard. Financial advice should be sought from a professional before entering into any credit agreements.
- 22 Oct 2021 - How Can You Avoid Creditor Pressure As A Director?
- 14 Oct 2021 - What Is Dividend Tax?
- 08 Oct 2021 - Is Being Self-Employed The Same As Being A Sole Trader?
- 29 Sep 2021 - Common Budgeting Mistakes Made By Startups
- 24 Sep 2021 - Misconceptions Of Setting Up A Business