
Business Finance Solutions
One thing certain when starting a business is that you will need some money. There are many finance solutions available to choose from – although not all will be appropriate for your individual needs.
A popular way to raise finance for a new or existing business is to take out a business loan. To apply, you will need to prepare a full and credible business plan to present to the bank. Their decision will be based on factors such as your business experience, how much you are investing yourself and the security you are able to offer in return for the loan.
If you lack security for your loan, there is a government-backed scheme called the Enterprise Finance Guarantee. In certain circumstances, the government will guarantee 75% of a loan against default. The borrower has to pay a 2% premium on the loan, which cannot be more than £1 million or longer than ten years.
Another option is to borrow from friends and family. In the right circumstances, this can be an ideal solution, but there are risks involved. Only you will be able to decide if your relationship with the person involved can withstand losing all of their money or them wanting to become more involved in your business than you would like.
Other sources of financing to consider are loans from the Prince’s Trust or government business grants. The Prince’s Trust Enterprise Programme is aimed at unemployed people aged 18-30. A basic loan of up to £4,000 can be granted along with ongoing business advice from a mentor. Government business grants are another option but the process can time-consuming and the grants hard to obtain.
There is also the option of finding an outside investor. This would normally apply to larger businesses with good prospects and the investor would want a share of the business as well as a share of the profits. The business can often benefit, however, from the investor’s valuable experience and advice. Business Angels are wealthy individuals who will sometimes invest in smaller companies or more risky ventures.
If you are unable to raise finance elsewhere, the only option might be to scale down your plans and rely solely on your own savings or personal borrowing. If you are starting up and initial outgoings are low, using savings or a small unsecured loan could be a way to cover your living expenses until your business is established, with early profits all going back into the business. Another way to keep going in the beginning is to continue in employment and run the business in your spare time, or live off your partner’s income.
For advice about financing a business, the government’s Business Link site has some useful information and many banks can offer assistance with business planning and financing.
If in the end you decide not to go ahead with starting a business, working freelance through an umbrella company can be a way to use your skills while retaining the freedom of not being tied to a single employer.
Best Business Finance Solutions
One thing certain when starting a business is that you will need some money. There are many finance solutions available to choose from – although not all will be appropriate for your individual needs.
A popular way to raise finance for a new or existing business is to take out a business loan. To apply, you will need to prepare a full and credible business plan to present to the bank. Their decision will be based on factors such as your business experience, how much you are investing yourself and the security you are able to offer in return for the loan.
If you lack security for your loan, there is a government-backed scheme called the Enterprise Finance Guarantee. In certain circumstances, the government will guarantee 75% of a loan against default. The borrower has to pay a 2% premium on the loan, which cannot be more than £1 million or longer than ten years.
Another option is to borrow from friends and family. In the right circumstances, this can be an ideal solution, but there are risks involved. Only you will be able to decide if your relationship with the person involved can withstand losing all of their money or them wanting to become more involved in your business than you would like.
Other sources of financing to consider are loans from the Prince’s Trust or government business grants. The Prince’s Trust Enterprise Programme is aimed at unemployed people aged 18-30. A basic loan of up to £4,000 can be granted along with ongoing business advice from a mentor. Government business grants are another option but the process can time-consuming and the grants hard to obtain.
There is also the option of finding an outside investor. This would normally apply to larger businesses with good prospects and the investor would want a share of the business as well as a share of the profits. The business can often benefit, however, from the investor’s valuable experience and advice. Business Angels are wealthy individuals who will sometimes invest in smaller companies or more risky ventures.
If you are unable to raise finance elsewhere, the only option might be to scale down your plans and rely solely on your own savings or personal borrowing. If you are starting up and initial outgoings are low, using savings or a small unsecured loan could be a way to cover your living expenses until your business is established, with early profits all going back into the business. Another way to keep going in the beginning is to continue in employment and run the business in your spare time, or live off your partner’s income.
For advice about financing a business, the government’s Business Link site has some useful information and many banks can offer assistance with business planning and financing.
If in the end you decide not to go ahead with starting a business, working freelance through an umbrella company can be a way to use your skills while retaining the freedom of not being tied to a single employer.