Unfortunately, lots of people are confused about what alternative finance options are available, and which ones are suitable for their business.
The finance option best suited for you will depend on what stage your business is at, and what your plans are. With so many different finance options available, finding the right one for you and your business is important.
The following are 11 different ways you can fund growth in your business.
1) Invoice finance
Invoice finance allows you to quickly release cash by converting the value of unpaid invoices into working capital. Find out more about the services we currently offer on our invoice finance page.
2) Asset finance
With asset finance, a third party will pay up front for an asset, and you’ll then pay the third party back in instalments over a set period. Check out our asset finance page to find out more about the different options we offer.
3) Business savings
Over time your business will save more money, often through increased profits or improvements in efficiency. You can then use these savings to grow your business further. Have a look at our business savings page to see what accounts we offer.
4) Government grants
The government offers a number of different grants to help grow your business, which you do not need to pay back. Visit the government website to find out more or to see if you’re eligible.
5) Bank loans
Bank loans are one of the more traditional and well known forms of business funding. The amount you can access, the interest you have to pay and the period you have to pay your loan back will vary from bank to bank.
6) Start-up loans
The UK government will loan up to £25,000 to entrepreneurs to start a business, providing you meet certain criteria. These loans have a fixed interest rate and can be repaid over a period of 1 to 5 years. Find out more on the Start Up Loans website.
7) Venture capital
Venture capital firms are companies that will invest large amounts of money into businesses to help them grow. They will invest this money in exchange for owning a set percentage of your business. The percentage they own will depend on a number of things, including the amount of money they have invested and the value of your business.
8) Angel investors
Like venture capital firms, angel investors will invest money into businesses in exchange for owning a set percentage. The difference between angel investors and venture capital firms, however, is that angel investors are individuals, investing their own money. This means they will usually invest smaller amounts than venture capital firms.
Crowdfunding has seen its popularity skyrocket in recent years, with a number of different online platforms available to aspiring entrepreneurs. With crowdfunding, lots of people will invest a small amount of money each, and receive non-financial rewards or incentives in return.
10) Personal savings
Many people will use personal savings to launch a business, or to fund growth in the early stages. If you can afford it, this is a popular option as it allows you to maintain full control of your business and won’t leave you with any debts to worry about.
11) Friends and family
If you don’t have any personal savings of your own, you could ask friends or family if they’d be interested in investing some money in your business. You should still set out terms though, so there is no confusion about repayment.
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