6 ways to fund your business
Whether your business is just starting out or you’re looking to take the next step in terms of growth, one thing is inevitable – you’re going to need funds at some point. Some of the reasons for this could include balancing out cash flow, buying new equipment, taking on more staff or generally expanding your business.
Although many will default to a bank loan, this option is not always easy and accessible for younger businesses. Fortunately, there are lot more funding options available these days which is great news for you as a business owner. However, it is important to consider all of your options carefully and go for funding that is best suited to your individual business needs.
With this in mind, we’ve put together a list of funding options to help get you started:
Crowdfunding is a good option for businesses who want to raise funds for a particular purpose. For example, fitting out a new outdoor area in your pub to benefit summer punters. Businesses can set up a funding campaign page and then receiving donated funds from a community of investors who are looking to support and invest in business ideas and ventures. It’s worth noting that there are usually some fees involved during set up and you’ll want to make sure that you are clear about how you will use the funds for your business. If you have a strong community presence or an unusual or innovative business idea then this could be the right option for you!
Another option to explore is applying for a government grant. You’ll need to meet the criteria to be eligible but the best thing about this type of funding it that you won’t need to repay the amount and there are often benefits attached such as business support and mentoring. You can visit the gov.uk web page to find out more details about the different grants that are offered in your area.
Start Up Business Loan
The government also offers a Start Up Loan for businesses looking to start or grow their business. Unlike a business loan this is an unsecured personal loan and has many benefits including a fixed interest rate of 6% per year. You can also repay the loan over a period of one to five years, plus there’s no application fee and no early repayment fee. You can visit the gov.uk web page to find out more.
Business Cash Advance
Liberis’ Business Cash Advance provides a flexible option for businesses who need a speedy, simple injection of funds. You can borrow between £2,500 and £300,000 at one fixed cost with no APR or penalty fees. It works by taking an agreed percentage from your credit and debit card transactions until the funding amount and fee is paid off - working perfectly in line with your cashflow, and ideal for seasonal businesses.
To be eligible, you’ll need to have been trading for over four months and be taking £2,500 per month in card takings. You can visit the Liberis website to find out if a Business Cash Advance is the right option for you!
Angel investors are individuals who provide financial backing for businesses just starting out. In exchange for their investment they will usually have a stake in the company and may sometimes want to have some involvement (this will need to be agreed between the business and investor). This benefits the investor if the business starts to make a profit as they will gain financially. However, if the business makes a loss or folds, the investor would not be entitled to claim back any of the initial investment. You can list your company on AngelList to get an idea of the other businesses and Angel investors that are out there!
Invoice financing can be a viable funding option for businesses who already have a steady cash flow. This type of funding allows businesses to then receive funds in the form of outstanding invoices. The amount of funds you are able to receive will depend on your annual turnover and the value of your outstanding invoices. This option is suitable for businesses that are growing quickly and sell products or services to other businesses. To get the best deal for your business you should always shop around and compare different providers.
So now you’ve weighed up your options it’s time to take your business to the next level!