Funding your Business

June 14, 2015 by Andy Crow

Funding your Business.

There are various ways that you can fund you business. Whilst banks remain many people's first port of call, you should also consider alternatives such as crowdfunding, equity finance and government funding.
After several years of limited access to finance, the funding situation is gradually improving. Undoubtedly the current climate is more positive for borrowers with the growth of the challenger banks and the less traditional funders providing both competition for the major banks and real choice for businesses. However numerous options need to be considered before selecting the right funding source and businesses should discuss their requirements with their accountants or advisers to ensure that the best options are used.

Banks

Many banks can still be reluctant to lend to smaller firms. There are various ways banks by which will lend, such as invoice discounting or lending against your assets. These are often considered as safer than a straightforward loan. The rate of interest can vary significantly depending on what level of risk you are assessed as having and how much you want to borrow.

Crowdfunding

Online lending and investment platforms are fast becoming a popular way of helping businesses obtain debt and equity funding using money from individuals. These peer-to-peer [P2P] networks include the likes of FundingCircle.com and often prove less risk averse than the banks.
On crowdfunding platforms, you publish details of your business, how much money you need and why, and what investors will get in return.
P2P lending, on the other hand, involves your company being given a risk rating, which dictates the interest rate you pay. Private lenders will then provide your firm’s finance on the basis that the riskier you are, the higher their returns will be.

Equity finance

Other equity options include venture capitalists and private equity firms, which can inject money into your company in return for some form of a share of ownership in your business entitling the investor gets a share in the growth of your business.

Government funding

A number of Government-backed programmes aimed at funding growing businesses are available but these vary by sector and region. For example, the Business Growth Fund aims to channel money to smaller businesses.
If you would like more information about these alternatives or any other business issues please contact Chorus Advisers on 0845 8671263 or email info@chorusadvisers.co.uk.