The decision has been made, the tossing and turning at night and the ‘what if’s’ have been ceased as you have taken the plunge and decided to start your own business. You’ve got a great idea, you know your market and you have big dreams, what could possibly hold you back? Finance. When anyone starts to think about starting their own business, finance is almost always the biggest worry. How will you start off? Who will support you? Well we have put together some options for you. There are a few avenues you can go down and thousands of sources that could help you start your business if you don’t have any personal savings; these are just some tips and advice on how to go about securing that crucial funding.
Understandably, business grants are well sought after, and usually the most difficult to get. If you do manage to secure one, the benefits are fairly obvious. The government have placed a massive push on small business grants, with the aim of creating businesses which will inevitably create jobs. There are endless schemes you can apply to, where the government has made available a portion of the tax payer’s money to help along a new business.
A great tool to use is the business finance support finder which is a government grant resource. This can help you find relevant funding that will suit your needs and it even lets you customise your search by giving you options to choose your business size, location and type of business activity.
It is also worth checking your local government to see if they offer anything specific for your local area. For example, if you’re a Welsh start-up, Finance Wales can offer both funding under and over £50,000. They state they offer a tailored approach, flexible finance and quick, local decision making.
Small business loan
Banks do offer loans to help a business start-up, and they are still popular today even though they are the original route for entrepreneurs. However, banks are becoming ever more stringent in the qualifying process of granting loans, so always be prepared for this before applying. Going to your bank can have its benefits, if for example you don’t have any personal savings and don’t want the responsibility of borrowing from family and friends. However you do need to produce a solid, clear, realistic business plan and pitch to a bank in order to secure a loan. If you are going down the bank route, shop around. Loyalty to specific brands and businesses is vast becoming a thing of the past with all the comparison websites around, and you do need to shop around for the best interest rates and terms that are best suited to you as a business. Your bank may offer an incentive for going with them for being a loyal customer or holding other accounts with them, however it’s always best to do your research to make sure you’re going with a bank that understands your business needs and goals.
Small business soft loans
A soft loan is a specific type of grant that offer a softer approach to terms and conditions. They may have smaller interest rates, or no interest rates at all, however it is worth bearing in mind that the repayment terms may be longer, meaning you are tied into a loan for a longer period of time than normal. An example of a soft business loan would be the government-funded scheme ‘Start Up Loans’ which offers new businesses loans of up to £25,000 for 6% interest with a 12 month repayment “holiday”. To date it has helped to fund over 10,000 start-ups with over £50m invested.
The Prince’s Trust also offers soft loans of up to £4,000 with the interest capped at 3%. They also offer support with your business idea and long repayment option that can be spread over a period of two to five years.
Before you apply for any type of funding for your business, be sure to do your research. Know exactly what you want and your goals for your business before you go into a pitching situation or start filling out any forms. Decide on the type of funding you need, and set realistic goals for your business that will allow you to pay the money back. Dream big, but keep it realistic. It’s worth bearing in mind that the people offering you loans and funding probably see thousands of people every year, so they will see through a badly thought out business plan. Take your time, think things through and make a list of exactly what you plan on spending the money on, if you have everything in your business plan completely transparent you are more likely to secure funding.