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Q: Can you give me examples of financing routes for my first business?

Feb 20 2007

Answered by: Marc Barber     Ask a question

There are several sources of finance available depending on the stage of your business and the amount of funds required. In the early stages of a business, borrowing money from friends and family may be the easiest and cheapest option available. Depending on the nature of your business, grants may also be available.

Provided that you do have assets to support a bank's lending criteria, you may also consider using a bank overdraft for working capital needs or a business loan to finance larger purchases and fixed assets.

If bank funding is not available it may be necessary to consider external equity financing from a business angel. This may seem an expensive source of money as it will cost you a part of your business in the form of equity. However, the experience of an engaged business angel is as important as the financing. Businesses most likely to succeed in raising private equity financing will be high growth scalable businesses with the potential to provide a high rate of return on investment.

Visit SmallBusiness.co.uk government grants guides & tips to help you identify the various government funding schemes and grants available. The key to choosing the most appropriate source of finance is to understand the investor's perspective associated with each type of finance.

 
Comments [4]
Comment by Lee Tumbridge
Tuesday 20th February 2007

Have you considered Wagerolling as a way of securing working capital. Wageroller facilities are available to any solvent business of any size or sector. The service allows a company to have it's wages paid for them for up to 2-months at a time, acting as a revolving credit line whenever it's needed. These facilities require no personal guarentees or asset based security. Wagerolling simply lends against the company's gross wage bill, and it even sits alongside other forms of finance without disturbance (especially complimentary for overdrafts). These facilities can be applied for online and the offer normally takes 3-5 working days to come back (via email. The impact that Wageroller is having on UK business can be found accross the national press in print and online).


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Comment by Iain Miller
Thursday 19th April 2007

How do we find a business angel? We are a relatively young business and have a very attractive proposition that we would like to put across to the right type of angel.


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Comment by Bridget Taylor
Friday 20th April 2007

The website www.angelsden.co.uk is a great way of finding a business angel. They have a huge database of angels who are all searching for new ventures in which to invest. They're officially launching at the begining of May, but you can go on and pre-register your business summaries now. I hope that helps.


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Comment by Ian Hepworth
Saturday 16th June 2007

Funding Solutions (www.fundingsolutionsuk.co.uk) offers free independent and impartial advice regarding finance for businesses. We can talk you through your options that include borrowing from banks and specialised independent lenders or obtaining investments from business angels. We can help you find the most suitable route and can ensure that you get the best possible rates.


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