6 Ways To Get Funding For Your Small Business

Piggy Bank

For a small business, a helping hand can be vital.  An awesome idea, plenty of hard work and sheer determination will set you up for success.  But it certainly helps to have the support of funding to help pave the way.

Funding doesn’t come in a one-size-fits-all format. For some, the involvement of others  (in terms of investment) provides many benefits. For others, simple lending is preferred. It all depends on what suits your business and what you are looking to gain from the funding process. Some businesses might wonder if funding is necessary at all.

If you are taking care of operations and trading comfortably, then what’s the need for any extra help?

Well, consider…

  • Cash flow
  • Safety
  • Growth
  • People
  • Innovation

These are all aspects that a business needs funds to facilitate. They are aspirational ideals that need to be nurtured if a small business is to prosper. This is why small businesses look for funding, and why there is a range of tried-and-tested routes for them to explore.

Here are 6 ways to get funding for your business.

#1 – Government Grants

Gov.uk Finance

Start-up loans are backed by the government and don’t just provide financial help. The scheme also offers support and mentoring to ensure that those in the early stages of developing their business have as much chance of success as possible.

The scheme also offers support and mentoring to ensure that those in the early stages of developing their business have as much chance of success as possible.

To be eligible to apply for a start-up loan, there are certain conditions and criteria to meet.  Loans will also not exceed £100,000. Having helped over 40,000 businesses so far, this scheme is one to explore for those at the beginning of their journey and there are plenty of start-up loan success stories to inspire.

Start-up loans are not the only government-backed option. There are many grant schemes out there with varying criteria and levels of support for small and new businesses.

Small business grants can be a really valuable resource, it’s all about finding the best option for your business and setting aside the time to appropriately complete any application processes.

#2 – Bank Borrowing

Barclays Business Loans

At the end of last year, bank lending to smaller businesses fell, as they increased their borrowing under the funding for lending scheme.  Despite this, banks are still a great place to start when looking to safeguard your spending.

An overdraft can provide you with an important safety cushion, allowing you to take care of outgoings while you await payment or funding. Overdraft charges can be costly, but they provide a useful resource for temporary situations that your business may be reliant on – especially in the early days.

#3 – Cash Advances

Credit Cards

With small businesses finding traditional lending more and more difficult due to restrictions and processes, another option to explore is a cash advance. Cash advances are different to loans – they are defined as an agreed sum of money advanced to you against future credit and debit turnover. This means that your business needs to accept card payments in order to qualify.

Unlike a loan, your repayments will depend on your incoming card payments. So they can go up and down depending on what is coming into you. With less paperwork and higher flexibility, cash advances are an increasingly popular option for small business funding in a fast-moving world.

#4 – Asset Finance

In a similar way to a cash advance, asset financing involves lending against the value of an asset. Much like a mortgage, it makes the asset accountable for any failure to repay instalments and enables your small business to push on with operations.

Asset financing can work for a company who need to invest heavily in certain assets to function. Interest rates can be high, but there are many assets that can be used as collateral, helping your small business to benefit from improved cash flow and staggered payments.

#5 – Investment

Shaking Hands

When it comes to traditional small business investment, there are two types a small business can benefit from:

  • Angel investors and
  • Venture capitalists

Angel investors tend to be high net worth individuals who offer financial backing in exchange for a share of the business (think Dragon’s Den). This type of investment can be hugely beneficial as it often gives you access to support and resource alongside financial help. After all, it’s in the investor’s best interests to take a hands-on approach towards the success of the venture.

Venture capitalists tend to invest much larger sums, in exchange for business shares. They will only do this when they can see a proven track record in terms of good management, great potential, and ambition. Though more money may be attractive, it can be much trickier to manage a venture capitalist deal and typically there is rarely support beyond the financial side.

#6 – Community Lending

As we become a nation of social-savvy entrepreneurs, an increasing number of peer-based funding routes are being explored as a means to raise capital.

These community-inspired crowdfunding options allow people to make contributions towards a business goal, but doesn’t always offer a company stake in return.

Crowdfunding options are not only good for inviting investment, they can also be a great way to spread the word about what you’re doing and why you’re doing it.

Whether you’re producing an innovative product or offering an inspiring service, community lending processes enable you to reach out to those around you as it often acts as a marketing aid as well as a funding system.

Another option to consider is whether you can lend from within your immediate community. A family loan can turn out to be a less-pressurised lending agreement. Although you need to make sure you can repay your family member, there is a good chance that you can benefit from your personal relationship and strike a better deal in terms of interest and timescales.

The Last Word

As a small business, there’s a range of funding opportunities available to help give you a valuable boost.  The key to finding the best one for you is through thorough research and strategic thinking.  If you know your business well enough then you will know what you need and the terms that you can meet for it to work effectively.

Remember why you are looking to top up your finances – whether you are looking to expand, recruit or achieve a safe margin. Securing funding for your small business can extend your opportunities, develop your processes and ultimately make a huge difference to the performance of your business.

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Ian is the founder of Opportunity Marketing marketing, with over 18 years of experience in successfully setting up marketing departments, creating marketing strategies and implementing these strategies across a wide number of SME companies in both the B2B and B2C sectors through a variety of channels.
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