How to raise business finance
Most businesses need a little extra help at times. The important thing is to know whether additional finance is needed because the business is expanding and requires more resources, or because things are going badly and the operation is running out of money. There are various sources of finance, but where to go to depends on whether you have a tried and tested business or whether you are relatively new without much of a track record.
If you are setting up a business, finding backers can be a struggle.
Typically there are four common sources for money: Friends, Family, Founders (ie you and your fellow entrepreneurs) and Fools.
Fools is probably a harsh way of describing them but there are people out there willing to give you a chance – and because they are not really fools but people prepared to take a calculated risk, if you can attract such support it will be because you made a good case for your business.
But if your friends and family don’t have the necessary funds to spare, you can’t find any ‘fools’ and you yourself have committed everything you have but still need a little more, it may be time to resort to commercial lenders.
Call in at the bank
Raising the money yourself is a good way of keeping control of the business and ensuring that you are not in debt to anyone else. These days, however, trying to raise more than a few thousand pounds isn’t easy. That doesn’t mean the bank is the only place to go, even though about two-thirds of all businesses do go to their bank manager when they need money.
There are disadvantages to bank finance. Most banks will lend you money but only against some form of security, usually your house. If you are happy to see the bank taking your home if the business doesn’t work out, then go ahead. Of course, in practical terms you may find you don’t have much choice – banks are often the first and last port of call http://paydayloans-on.com. Typically banks will lend up to ?100,000 for a small business. For larger sums you need to call on the specialists – venturing arms at major High Street banks, specialist seed investors, business angels or even incubators (though there are few prepared to lend to untried internet ventures these days).
Start with a bank and see how much is available and how much it will cost.
Specialist backers
Then you can branch out to the specialists. Much depends on what kind of business you are running and who you are. If you are running a hi-tech venture, there are some investors that specialise in the sector. If specialist investors and banks aren’t to your taste, there are other sources of funding.
Grants can be obtained from Business Links and other local development agencies. Some can be provided by the Department of Trade and Industry and can amount to tens of thousands of pounds. The European Union also has various cash schemes in place for small businesses. Loans are also available from the Government-backed Small Business Service, which can lend as much as ?250,000, though the terms are stringent. The scheme is aimed at small companies which haven’t managed to get funding elsewhere, perhaps because they have few tangible assets against which they can borrow.
Schools for cash
Finally, universities and further education establishments, business schools and other academic instituti
Incubators came into their own in the dotcom boom and many attracted vast sums of money from venture capitalists. Some still have modest sums to lend and can provide funding or practical help with IT, accommodation, telecoms and even legal and accounting back-up.