Q: I am planning to start my own recruitment business but am having difficulty finding the necessary funding. Are there any grants available?
Aug 17 2005
Answered by: Clive Lewis Ask a question
There is no easy way of finding the funds necessary to start a business. Generous grants are only available in areas of high unemployment and only for businesses employing more than one. If you do not live in such an area, finding such a grant may be difficult – though a small award of up to £2,000 may be available. Research & development grants are another option but as these are designed to test the feasibility of a (usually technology-related) business idea, your type of venture is unlikely to qualify.
If you are starting a business you have to be prepared to take some risks and stick your neck out. I know that you believe you are doing this by putting up some of your own money but to build a successful business may require an even greater commitment. That may mean borrowing to find the money or finding a partner or an investor.
There is, as you rightly say, the Loan Guarantee Scheme. But to be eligible for this scheme you have to be able to show that you have already tried to get a conventional loan, but have failed to do so because of lack of security. So if you own your home and if there is a gap between the amount of your mortgage and the value of your home, which would provide enough security to get a straightforward bank loan, you won't be able to use the Loan Guarantee Scheme.
What this all amounts to is that the government, local authorities and the EC will provide help in starting businesses if it would cut unemployment or if it would encourage technological innovation or, in some cases, if you would be unable to start a business because you are not able to provide the funds yourself. Otherwise, in general, you're on your own when it comes to finding the money.
But with a good business plan and good management skills, paying attention to cash flow, getting a loan may not be as frightening as you think. Talk to your bank manager about what you want to do. There are loans, for example, which give you 'holidays', so that initially you pay just the interest and don't repay any capital. It's also possible to get loans that you repay over a ten-year period allowing you enough time to build your business. Banks are much more careful than they were ten years ago about giving loans and won't do so if they don't think that your business has a good chance of succeeding.
The other possibilities for finding the capital include taking in a partner or finding an investor. There is now a National Business Angels Network (www.bestmatch.co.uk; 020-7329 2929) and you may be able to find an investor in this way. Of course, some investors may want to play an active role in your business and you may not want this commitment.
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