How to get funding for your business

Often businesses will be funded by the people who own them. How many stories have you heard of dedicated passionate owners pouring all their cash into a passion hoping for it to succeed. This is incredibly admirable, but you don't need every aspect of your business to be self-funded - it may not even be feasible to do this, particularly if you are looking to grow.

What if you want to hire new staff, how are you going to pay them? What about a bigger office or new desks or even a second site? All these physical amenities require significant capital, which you may not have. So what do you do in this situation? You want growth but it’s going to cost.

Have you considered looking for outside funding? You would be surprised at how many different options there are for this. The first one that might come to mind is:

Banks

When you think of funding you probably think loan, and when you think loan you think Bank. Whilst getting a small business loan is not straightforward, most of the country's leading banks offer them. HSBC, for instance, are quite flexible in this regard: offering loans between £1,000 - £25,000 that can be paid over a maximum of ten years. So banks are perhaps more lenient than you may have thought. NatWest allow small businesses the possibility to borrow up to £50,000. Whilst we wouldn’t try and dissuade you, getting a bank loan is not easy. Business plans must be detailed, because the one thing banks will want to see is that you will be able to repay the loan. There are other options to consider besides this such as:

Crowdfunding

We suspect you might have come across this term, but may not know what it means. Over the past decade, this has become a more and more popular method for small businesses to obtain funding for particular projects. How does it work? Essentially you pitch your idea onto a platform, usually with a video saying what you are going to do with the money, and then put it out to the public. And it is they who become your investors, as opposed to one or a few people. You could have lots of investors who all have a stake in your company (equity) or you could offer other perks like access to product launches or discounts (rewards) - whatever you feel will get people to invest. Check out sites like SEEDRS, Indiegogo and Crowdcube. These are particularly good platforms for small businesses.

Startup loans and other schemes

Another funding route to consider is applying through a government initiative known as Startup Loans. This is a very popular scheme that allows you to borrow small amounts of money that can be paid back over a 1-5 year period. The crucial difference here is that the recipient receives unparalleled access to business mentors and other forms of support, giving you the best possible chance to succeed. This is certainly worth looking into if you are after flexible terms and the more ‘hands on’ assistance. Over £400 million pounds worth of loans have been provided so far - showing it has been enormously successful.

You should also take a look at the government’s Regional Growth Fund. This essentially allows local organisations around the country to award loans or grants to businesses that fit their criteria. To see what current live programmes there might be in your area, check here for more information.

Angels

Robbie Williams loved them... but he probably wasn’t referring to investors!

This is another option to pursue for funding. These business angels are normally wealthy individuals who will have significant experience within a certain industry, and they will be looking to invest in early stage companies, who have potential to grow. If you prefer this type of sole investor dynamic, you should look for people who have expertise in your area to give you the best possible chance of success. Check out sites such as The Angel Investment Network and AngelList for a comprehensive list of investors. But be aware that you might be asked to give equity (a stake in your company) in exchange for investment - so be prepared for this possibility.

Borrowing from family

This is probably not at the top of your list of options, but it might be that you decide to ask for a loan from your nearest and dearest. And whilst for some people, the idea of mixing business with family will sound like a recipe for disaster, this can work. Treat this as if you were pitching to a bank or an angel. Create a detailed business plan of what the money will be contributing towards and also how long you think it will take to pay them back. Borrowing from a relative could prove advantageous to you. Paying back may not have to be within the most strict time frame and there will be more sympathy if things don’t go as planned. Depending on how generous your family are, this could be an avenue worth exploring.

Interested in ways you could grow your business? Take a look at how we help UK independent businesses grow with our range of payment solutions including card machines, online payments and phone payments.