Every small business needs funds to survive and thrive. Sometimes you will need to look further than your bank account or current order book, especially during quieter times or when you are looking to expand and want extra capital over and above your normal revenue to make it happen. So what can you do to make it happen?
Obviously, there is always your local bank, but with many banks making it harder and harder to secure business funding for any existing businesses let alone a new start up, it may take some creativity to make it happen.
We look at a few different ways you can go about securing the extra funding.
Why not see if your business or new enterprise qualifies for one of the many grants or funding streams that are currently available. Government money has been set aside to be distributed through both local and national organisations, with different funding criteria set for each scheme, it may take some delving, but it’s a chance for free money if you qualify.
New Business and Start-Up Loans
Obviously a grant is preferable to a loan, but the UK government are seeking to boost the economy by offering loans to start-ups. Some leading public figures are also offering new business loans. Those offered by Sir Richard Branson with 3-5 year repayment terms may be an option for some.
Friends and Family Funds
It may be possible to approach friends or family to help. However, this should only be done with a formal written contract between the parties. It should be treated with the respect that you would afford any lender. It can be an ideal solution, but be sure terms are clear regarding repayment. You don’t want it to spoil your relationship. You should also clarify whether as a lender they have financial liability for your business.
You can choose to ask for donations as part of donation crowdfunding. This relies on the public donating funds to your business, and does not need to be repaid. You can also ask for funds in return for shares or a stake in your business through equity crowdfunding or use debt crowdfunding, where the lender gives you money with the promise that you will repay with interest.
Funding through angel investment requires an investor prepared to lend you money from their own disposable finance. You must be prepared for the angel investor to take an active interest in your business to protect their investment. They will also want maximise the returns they will see on their money. The terms are clearly agreed, with an expectation of a return for them within three to eight years. You will generally be able to benefit from their business expertise. This could be a huge chance for your returns to grow more steadily. You may also gain some helpful advice for managing cash flow to help with cash fluidity going forward.
Don’t forget that having secured extra funding you should be looking to build your business reputation and improve revenue. This will help to ensure your business is in the best place to move forward. Why not use some of the tips we offer in our article on how to build a strong local reputation for your business.