Getting the cash to start up a business is no easy task. It could be that you borrowed some money from friends or family, you may have got a start-up loan, or your bank may have offered you a start-up solution.
That’s great for starting out, but now you have a financial history, and some cash reserves – how do you find the funds to grow your business without leaving yourself short on capital? There are a few different options you can look for – and some your accountants central London based may chat through with you depending on your financial position.
It’s a misconception that it is just start-ups that can apply for grants and loans from the Government when this actually isn’t the case. If you are classified as a “new business” (up to 2 years old) – you can apply for a loan of between £2500 and £25,000 for a low fixed interest rate. You can apply for this via the Start Up Loans Company.
Loan from the Bank
This may seem the most obvious form of getting investment in terms of getting funding. The approval rates for business loans are still fairly high – so it wouldn’t be as difficult as you might imagine securing a loan. It may be worthwhile speaking to your bank and finding out which funding options are available to you, what kind of security they need – and maybe chat through whether you’d be able to afford the monthly payments. Again, it’s always a good idea to consult your accountant for advice.
We aren’t suggesting you need to go on Dragons Den – but you get the idea! Business angels aren’t just a TV notion – there are lots of them out there looking to invest in promising businesses. The British Business Angels Association claims to invest around £1.5 billion each year. This makes them the biggest source of income when it comes to start up and new businesses that want to grow.
This is when you are given finance in return for an equity stake in your business. It is frequently used for funding of buy-ins or buy-outs. The decision is based on ambition, growth, strategy, the credibility of the company as well as other determining factors. It means that some elements of control and of course ownership will go to the private equity firm – but it could be the funding that is needed.
Crowdfunding is one of the newest forms of raising money for businesses. This is where you ask a large number of people to make smaller donations to help grow your business. You may have heard of Funding Circle who was the first platform to allow this kind of business funding – however there are now lots more available. It definitely has proven to give some businesses a good kickstart.
If you are looking to grow your business and are looking at funds, the options above are a good place to start.