How to secure start-up business funding

When you’re just starting in business for the first time, getting your hands on the finance you need to get established and begin to grow can be a difficult task.

However, depending on the amount you need, you may be able to approach one of several different sources of funding – including simply calling in any outstanding debts from family and friends, if your start-up costs are fairly low.

Family and Friends

It’s not always appropriate to lean on your loved ones to help you get your business started, but it’s worth considering.

Do you have anybody who owes you a decent chunk of money? If you’ve already become used to living without calling in that debt, it might be worth asking them to pay you and putting it into your business instead.

Likewise, if you’re starting a craft-related business, you might consider calling on family and friends to place your first few orders – something many people are happy to do, and which could really help give you an influx of funds in the early days of your new venture.

Start-Up Grants

For larger sums of money, you might find there are business grants available in your region, or in your chosen industry area, that are specifically intended to help people get off the ground.

These usually don’t cover 100% of your costs, but may be capped at around 50%. That can still be an important injection of funding, however – particularly if you manage to gain approval for a grant scheme where the money doesn’t need to be paid back.

Other forms of lending, like small business loans, personal loans and even credit cards can bridge short-term gaps in funding, but be careful before putting your entire business into a high-interest lending product.

Commercial Investors

For larger sums of money, it’s likely that you’ll need a third-party investor, and that might not be limited to what the bank is willing to lend to you.

Optimists call them ‘business angels‘ and pessimists call them ‘dragons’, but either way, some high-net-worth individuals have made a career out of buying into businesses, growing them in size and profitability, and then selling them on.

If you can make a decent pitch to somebody like this, you’re in with a good chance of securing a sizeable investment – from tens of thousands of pounds, to millions if you’ve got a large-scale opportunity and can get a meeting with a major investment group.

Bridging the Gap

If you need between £250,000 and £1 million, you could find it difficult to obtain from a single source; it’s simply not a sum of money any one person or organisation is usually interested in lending.

See if you can aggregate together multiple funding sources in order to reach your target – but be wary of selling off chunks of your business to too many different private investors.

Look out for government initiatives, such as Enterprise Capital Funds, which are aimed at this previously underserved band of business financing, and can give you the money you need from a single source.

Bytestart Limited

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