There are a range of sources of funding which may not be traditional but could still be viable. Many of the traditional funding options (backed by public-sector organisations) and grant schemes have decreased but this doesn’t mean your business can’t get financial support.
Bank lending has also taken a nosedive in that last couple of years. The government has been pushing for more funding for small to medium-sized business but banks aren’t keen and many businesses are still coming up against several brick walls when looking for finance.
Businesses in specific regions are unfortunately having even more difficulty finding funding. The Midlands and the North West have fared particularly badly due to the closure of many funds. The trend unfortunately looks set to continue as spending cuts show no sign of slowing down. Do not despair, there are still options open to you and your business can thrive with the help that is out there.
There is a wide range of less popular funding sources which many businesses simply would not know about. They cover everything from specialised companies and organisations such as business cash advancers to the growing trend of crowd funding. Further sources of funding are emerging too with the establishment of Local Enterprise Partnerships and the growth in the number of Credit Unions.
If you’re looking for a loan to support your business then consider Community Development Finance Institutions (CDFIs) as an alternative to your high street bank. CDFIs will lend money to businesses, sole traders and social enterprises who have struggled with find financial backing from regular banks. Some have received approval via the Enterprise Finance Guarantee which means the government has provided a guarantee to the lender which enables SMEs who have no security to sign for a business loan.
Consider Traditional Funding Routes
Traditional equity investors should not be forgotten either. For many businesses they still play a key role and are particularly active in modern times with hundreds of millions of pounds of funding being committed every year in the UK by this type of investor. Traditional funding investment covers everybody from the venture capitalist to the much-needed angel investor and shows that there are still plenty of non-bank options for those seeking investment for their business.
Applying for equity investment can be a scary prospect, especially if you’re a new business owner. Your proposal needs to be checked and double-checked and needs to genuinely present a structured and comprehensive plan for a decent return on investment for any potential backers. The majority of potential investors will expect to see your business plan and want to see exactly how you plan to make their return. As long as your plan ticks this box and you present it in an understandable and professional way, investors will be interested. Some equity investors are more than happy to wait and support your business through the growth and development stages to ensure their return is increased. There are even some investors who specialise in business start up funding which could be ideal for new companies.
Following a traditional route could be perfect for your business but don’t forget the other options and consider researching your local community’s enterprise projects to see whether you can benefit from any of them too. Looking beyond the traditional sources of grants and government-backed funding is essential if you want to guarantee funding for your business.
We have a range of articles related to helping start-up and small businesses. From business ideas to funding and how to market your business there is something to help you at each and every step on the business ladder.
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