Financing a start-up business
29th April 2015
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Starting up a business is a difficult process and can be highly stressful, not least if you don’t have the capital behind you ready to invest in your new venture. If this is the case then funding will have to be found in order to get your idea up and running. There are several avenues which can be explored to try and get the investment that you need.

Possibly the most obvious route to go down would be to try and get a loan from your bank. In order for the bank to even consider lending any money, you will need to show that there is a market out there which your business will fit into. You need to be prepared for a loan meeting and have done through preparation beforehand. As well as having researched the market you are looking to fit into, you will also need to have realistic cash flow forecasts and be able to prove that you will be able to pay the bank back with interest. Be prepared for them to ask you to put security against your loan, such as your house or car, to protect them if you don’t make your repayments. Think carefully about this and how much you are willing to risk if your venture doesn’t turn out to be as successful as you thought it would be. Can you afford to lose your house if things don’t work out?

Grants are great if you are able to get one. As long as you stick to the terms and conditions, whatever money you get is yours to spend on starting up your own business without the worry about having to pay back a single penny. You also won’t have to worry about losing any control of your business. However, finding a grant that is suitable for you is no easy task and if you are lucky enough to find one, competition is fierce and the application process can be quite time consuming. Grants generally don’t cover projects that are already started and will only support proposed businesses.

Investment finance is another option available for raising funds but it does involve selling part of your business as shares to one or more investors and any profits or losses will be shared amongst those holding shares. This option can be beneficial as investors can bring in new skills and new potential business opportunities, you won’t have to pay off a loan or interest and any risks of the business are shared amongst the shareholders. However, this can be a highly demanding and time consuming process and at the end of it, you will only own part of your business meaning that you will have to consult your investors before making important decisions. You also have to be a limited company in order to sell shares.

There are other options available as well, but these are the most common forms of funding. To talk through a range of different options get in contact with B2B Cashflow Solutions today.

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