Types of business financing
Business or start-up loans from banks or building societies are a
first-stop. Here, you will get an idea of what loans cost and whether
you will qualify for a loan. Don’t get discouraged if you don’t fit the
bank’s lending criteria; become more innovative. Keep in mind that the
financing should meet your business needs.
The UK government offers grants to small businesses and it is worthwhile looking to see if your business can qualify for such grants. One such grant is the Train to Gain www.traintogain.gov.uk. Also, if your business is using energy-efficient equipment, then you may qualify for a zero-interest loan from the Carbon Trust.
Another way to source financing is to look for investors, and investors can come in many forms. One type of investment that is growing in popularity in the UK is so-called ‘angel financing’. This option may not be suitable to every type of start-up business, but should be considered.
Angel financing refers to investment by a wealthy individual or individuals into your business. The drawback is that in most cases, like venture capitalists, they will take a stake or share in your business. This type of capital may make sense for those looking to launch a high-tech business or cutting-edge product that may require high initial investment to get started.