Start-Up Funding & Grants

Start-Up Map
Start-Up Map

It wasn't that long ago that borrowing from your bank, friends, or relatives were the only available options if you need to raise money to start your business. How times have changed!

While some high street banks are still an option for a robust proposition with match funding or the security of the equity in your home, many start-ups have found that traditional bank overdrafts and loan facilities are no longer a realistic hope.

Thankfully, a whole new world of 'alternative funding' is emerging. You may or may not have heard (and apparently 95% of businesses haven't) of equity based crowd funding, reward based crowd funding, peer-to-peer lending, pension-led funding, invoice trading, debt-based securities business angels and private investing (as seen on TV programmes like Dragon's Den and Shark Tank).

Free Funding Factsheet Free guide to funding your business

Attending your first networking event can be quite intimidating if you do not know what to expect. This factsheet outlines the most important "dos and don'ts" to ensure

Possible Sources of Funding

Credit Cards

Whilst it is easy to identify what it’s needed for, finding the right source of finance to meet the eligibility criteria can be difficult. Below are some options to consider, what you can use them for and roughly how long it takes to arrange.

We strongly recommend that you shouldn’t overcommit yourself by taking on too much debt. Sometimes a mix of funding is the best way forward.

See: What is the difference detween equity and debt?

Savings/Own money

Avoid additional borrowing if you can. Consider using personal savings instead if that is possible/practical.

Business Grants

One of the most regular questions that we are asked is "what grants are available for new business start-ups?" and the truthful answer is that there are not as many as you would think. However, as a grant does not need to be paid back, it is well worth spending a little bit of time to find out whether there is anything that you can claim. As you will discover, the business grants that do exist generally come with certain conditions. These will not be interest rates or repayment schedules but are far more likely to be related to what type of business you are starting, where you are going to be located and whether you are going to create any new jobs.

See: Are there any grants available for your business?

Re-mortgage

Releasing equity in a property to set up a business can be risky, therefore consider very carefully before putting your own home on the line.

Asset finance

There are lenders who will allow you to borrow the money, with the loan being secured against the value of the item itself.

Lease finance

Often used for vehicle finance. The interest rates can be high, but you’ll get a quick decision.

See: To lease or not to lease, that is the question.

Personal loans

Interest rates vary dramatically depending on the applicant’s perceived risk profile. You can do this online and get instant decisions.

Business loans

Available from the main banks and online finance providers. They’ll ask you to provide a business plan and a financial forecast. The interest rate can be anything from 4% (usually only with secured loans) to 20% on unsecured loans.

See also: Increase your chances of being approved for funding.

Government start-up loans

Some countries have government backed loan schemes to support new business start-ups. They are treated as unsecured personal loans. Typical time scale is 2 weeks from the submission of your business plan and financial forecast to get a decision.

Overdraft

Interest rates can be quite high though and is charged per day you use it, so it’s best not to rely on this option for long term finance needs. It can take a week to get approval for an overdraft.

Business Credit cards

Again, not a good way to borrow long term, but great for short term funding and you’ll get a quick decision with the card despatched and live within a week.

Supplier/trade accounts

Often this will mean that you do not have to pay for the item upfront, but can delay the outgoing payment. This is great for businesses who are awaiting invoices to be paid.

Invoice discounting/factoring

Allows you to access the value of your invoice before your client has paid it. This can effectively plug cashflow gaps. Charges vary from one supplier to the next, so you’ll need to get quotes from several and understand how each service differs first.

Investors

Someone may wish to put money into your business in exchange for shares, profit share or a directorship. You will usually need to produce a business plan or ‘pitch deck’ to attract their attention.

Credit Cards Copyright Disney Television
Business Angels

If you have a business idea which needs to grow quickly and has a good chance of making sizeable profits, you may be an attractive proposition for a Business Angel. As well as investing their own money, you will also acquire their expertise and ready-made contacts and reputation (good or bad so make sure that you choose wisely!).

See: What are Business Angels?

Crowd funding

This is the fastest growing type of funding. It does involve a bit of effort on your part in writing up a campaign, publishing and sharing it on social media. There are lots of different websites/platforms on which to publish your campaign.

Peer lending

This is an ‘any purpose’ loan where individuals or businesses put surplus funds in a ‘pot’ and applicants can then apply for funding from that ‘pot’. Decisions are quick and interest rates are determined according to risk.