5 Financing Options Available to Budding Entrepreneurs

Thursday, February 19, 2015, 3:00 AM | Leave Comment

Financing a new business is never likely to be easy or straightforward and the process often requires entrepreneurs to strike a delicate balance between ambition and caution.

Taking on too much debt can be dangerous but credit and other forms of finance are inevitably integral to the early-stage progress of new businesses in any sector.

With that in mind, here are 5 ways in which budding new entrepreneurs might look to finance their fledgling operations and to pursue growth in their field.

  1. Government-backed grants

    There are various ways in which the government aims to help and support new businesses around the UK.

    Part of this has to do with tax codes and business rates but it also relates to grants and to the availability of essentially free funding from government-backed sources.

    Competition is naturally very fierce and the application process can be lengthy but undoubtedly worthwhile for any new business keen to get seed funding in place before pursuing expansion.

  2. Crowdfunding

    Crowdfunding is among the fastest-growing business finance mechanisms in the world at present and the market in the UK is expanding at a particularly sharp pace.

    For small businesses with big ideas, peer-to-peer lending can work extremely well because it allows them to attract investment quickly and on the strength of the potential they’re able to demonstrate.

    Crucially, crowdfunding platforms are developing in a way that makes them easier to use and more secure as the services being provided in these contexts continue to mature.

  3. Short-term loans

    Banks and other mainstream lenders tend to be very difficult and, in many cases, impossible to persuade when it comes to start-up business loan applications.

    However, there are alternatives available that are designed to give new businesses a chance to lend money they need for relatively short periods of time.

    Interest rates will generally be high but can be negotiated and often make sound business sense for companies whose products or services are demonstrably in demand.

  4. Cash flow loans

    If your business is already up and running and able to demonstrate reliable revenue streams then there are finance products designed specifically to meet your cash flow needs.

    Often these solutions have been created with the demands of specific industries in mind and they can provide cash injections at crucial moments during the early stages of a small company’s development.

  5. Alternative overdrafts

    Our final example of the funding options available to entrepreneurs as they look to get a new venture off the ground is alternative overdrafts.

    These can be established alongside other financial management solutions and services and provide what can often be priceless peace of mind for small businesses looking to survive and grow.

    An alternative overdraft can be particularly useful to seasonal operators who are often met with urgent needs to invest or to cover costs on short notice.

Getting good advice

Even entrepreneurs with decades of experience in starting and developing businesses can find themselves making missteps and wrong turns as they look to establish a new enterprise.

And the naivety of inexperience isn’t always an advantage for entrepreneurs determined to reach their ambitious goals.

Whatever your situation, when it comes to creating a new business from scratch it helps to get all the good advice and well-informed support that you can find, and nowhere is that more the case than when it comes to finding financing packages that tick the right boxes.

author BIO

John Baird is a personal finance and insolvency expert from Scotland Debt Solutions. He specialises in advising people on how to manage their money and deal with their personal debt problems.

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