You have the idea, you have done your research and you are ready to go into business. Just one more thing, do you need funding?
Here is a review 6 of the best funding options available:
There is no doubt that starting a business is a veryexciting time for entrepreneurs. As someone who deals with new business start-ups every day, the sense of ambition and realization that you’re going to achieve your dreams is overwhelming. That said, it can also be the most daunting time.
An entrepreneur’s greatest concern can be to raise the appropriate business finance needed to get their business of the ground. They may have a great idea, a knowledge of the market, how to promote and sell their product or service and plans to make it a real success but if they cant finance the business then it may never get out of the starting blocks.
There are many options for funding new companies, but finding and securing the cash requires a lot of research and sometimes careful negotiation. Above all, however, you need a commitment to your business.
Before you go down the funding route, consider the following:
- How much finance do you need?
- Are you willing to borrow or give up some ownership of the business in return for investment?
- How long do you need the finance for?
- In the case of borrowing, what security can be provided?
If you can answer these questions and are sure you need funding for your new business, I believe these are six of the best options available.
1. Funding for Lending Scheme
Recently extended to 2015, this government driven scheme is designed to increase the amount of lending that banks and building societies are doing. In theory this should make getting loans for startup businesses easier despite the current economic conditions.
2. Enterprise Finance Guarantee
Another government driven scheme, this time focusing on those who haven’t been able to secure a traditional commercial loan due to a lack of security or proven track record. This is ideal for new entrepreneurs who have a great idea but lack any history that will convince the bank they are on to a winner. You’ll still have to prove you can afford it but it increases the chances of being accepted for a normal loan.
3. Supply Chain FinanceScheme
Backed by some of the UKs leading companies in co-operation with the government, this scheme allows small companies to get funding if they have secured a contract to supply a larger company. The larger company simply notifies the bank that an invoice has been approved for payment and the bank can offer a 100% advance of the amount. In essence the large company is guaranteeing the funds to the bank. This is great for smaller companies selling to larger ones but struggling with cashflow or meeting demand.
4. Start-Up Loans
Backed by James Caan from Dragons’ Den, this is a government funded initiative designed to get more people into business in England and Northern Ireland. This is an ideal opportunity for anyone with a feasible business idea but with no access to finance. Offering business support as well as money, this scheme is a very viable alternative to traditional lending from the banks.
5. Prince’s Trust – The Enterprise Programme
Although the Prince’s Trust are involved in a wide range of initiatives, one which catches the eye is the Enterprise Programme. Designed to help young people finance their startup business ideas it is probably the best option for 18-30 year olds who are unemployed and unable to raise the finance they need from other sources. As well as normal startup grants, they also issue test marketing grants of up to £250 so you can try out your ideabefore committing to it fully.
6. Regional Growth Fund
The main purpose of this scheme is to help fund the growth of companies to produce new jobs in local areas across England. There is a fund of £3.2bn allocated and you can submit bids for your share to fund your project or programme. Round 5 is currently open until midday 9th December with up to £300m available. Bids can be supported by local authorities but should be submitted privately. Ideal forlarger, local projects that need significant investment (£1m+) but will create sustainable jobs in the local economy.
By Paul Bryant, managing director and founder of Setup A Company