New businesses often need a cash injection to enable them to get started. This may be for running or manufacturing costs, for office or retail space rental or simply to enable the entrepreneur to leave their existing employment. There are a wide variety of options for obtaining a loan or grant and these will be considered below. The important thing to remember before committing to any of these options though, is to ensure that you a fully prepared for what you are going into. Ensuring that you have a good handle on what your expenses are and what your budget it is crucial.
With this in mind, let’s consider some of the financial options and products available to aspiring entrepreneurs and business leaders in the UK.
- Bank or Building Society Funding
Initially, you may want to consider consulting with your local bank or building society to discuss your funding options. Partnering with a reputable building society such as Saffron may be a good place to start, as building societies usually have a greater interest in backing local businesses and entrepreneurs. Companies such as Saffron also offer specialist business saving accounts that enable you to maximise your capital, so you can develop a long-term relationship that benefits your venture as a whole.
- Government or Organisation Schemes
Depending on your circumstances and business proposition you may be able to obtain a loan or even a grant from a government or organisation. The government has several schemes. There is the Start-up Loans scheme which may loan you up to £25,000. This scheme is open to almost everyone with a good business proposition. However, as this sum is a loan rather than a grant you would be required to pay it back. The current term is 5 years with interest of 6 percent. There is also the Enterprise Allowance Scheme but this is restricted to those on Jobseekers Allowance and, as it is an allowance, is limited to £1,274.00. There are other organisations that may be able to help, such as the Princes Trust, and it is worth making enquires with them.
- Crowd Funding
Although it may be difficult to get one investor to commit the entire amount that you need to start your business venture, it may be possible to get multiple individuals to each contribute a small amount of what you need. This form of investing is called crowd funding and there are now many websites that help you to propose to potential investors. Once you have submitted your business plan on a website investors will then be given the opportunity to invest as little or as much of the total funds that you require, without forcing you to sacrifice equity in some instances.