If you are looking to start a business, or grow an existing one, finding funding sources are a necessity. However, with so many different types of funding available, it can be overwhelming to know where to begin.
This guide will help to show you what options are out there and what may be suitable for your business. Let’s jump right in.
Small Business Government Grants
For small businesses, The UK government can provide funding and grant opportunities to help new and existing companies to grow. However, there are specific criteria that need to be met for a business to be eligible for the grant. If successful, your business will not have to pay anything back.
For you to successfully gain a UK government grant, you will have to meet specific eligibility requirements and it may be a long-winded, time-consuming application process. It could be the ideal way for you to get some much-needed funds if you have time to spare.
Crowdfunding
Crowdfunding is becoming more popular with the increase in funding websites online at the moment. This is a method of raising funds from contributions from investors or purchasers. There are different ways to use this option, such as equity-based crowdfunding where you exchange equity for investment.
There is also reward-based crowdfunding, where investors receive rewards in exchange for their capital. Remember, it typically takes plenty of preparation and marketing to stand out from the crowd of other businesses.
Friends And Family
Having family and friends to provide the launchpad for your business is one of the more common options when it comes to raising funds. By having your close ones provide funding, either through a form of debt or equity, you can avoid working with people you don’t trust.
Also, it is a lot easier to convince your loved ones to help with your project, rather than pitching to strangers who don’t know who you are. However, be careful as you are risking their funds and relationships can be damaged if you aren’t responsible with their money.
Venture Capital
Venture capital can be a great way to have experienced investors help your business expand. But, this option isn’t for everyone, as venture capitalists usually are looking for companies with high-growth potential, typically technology-driven in the information technology sector.
They will take an equity position in the company, then using their knowledge and experience, help to grow it. Venture capitalists will likely expect a healthy return on their investment and probably have to give up some ownership or equity in your business. Ensure the investors will bring relevant skills and experience to your business.
Small Business Loans
If you can get a business loan at a reasonable rate, they are an efficient way to raise finance for your business. You should check the market and see which companies are offering the best deals, rather than jumping in early.
Small business loans must be paid back and you should be careful with the terms that are agreed to. It is recommended to find other forms of finance before taking on debt.