Sources of finance
Getting your business idea off the ground is likely to require some form of initial finance and maybe long term finance too, if you don't expect to make a profit straight away. You are likely to need an initial burst of finance for a variety of reasons, including:
- Purchasing equipment, furniture or motor vehicles
- Setting up your business premises and installing phone lines etc.
- Purchasing stock, raw materials and stationery
- Advertising and marketing
- Legal and professional fees
Personal savings and loans from family or friends
Although using personal savings or borrowing from your family may mean you won't have any borrowing costs, you must remember that if your business fails, the money could be lost forever. You should carefully consider how your personal relationships might be affected if you use savings or loans from others you are close to.
Bank loans and overdrafts
It might take more effort to obtain a bank loan or overdraft, but the risk of losing money if your business fails might then be shared with your lender. Bank loans are more suitable if the borrowing is required to purchase business assets or for other long term purposes, whereas bank overdrafts should normally only be considered to help with short term cash flow, as the cost of borrowing is normally higher.
Again there may be a significant amount of effort required to obtain a business grant, but if you are successful, it could provide your business with a non-repayable amount to help get you started. Options include:
- The Prince's Trust - for people aged 18 to 30
- The Department of Trade and Industry (DTI)
- Local Enterprise Agencies (LEAs)
- Regional Development Agencies (RDAs) - for regeneration in rural areas
Other common sources of finance include:
- Leasing of equipment and hire purchase
- Obtaining credit terms from your suppliers
- Customer invoice factoring
- External investors
Get in touch
We can help you decide on the most suitable and cost effective ways of financing your new business venture. We can also assist with calculating the expected level of investment you are likely to require.
Why not get in touch for a free and friendly chat to discuss your needs.