You’ve got the drive, the skill and the determination to make your business idea a reality, but what about the finances? With various loans, grants and potential investors out there, it can feel like a bit of a minefield at times, but it doesn’t have to be.

In this article, we’ll explore six different ways to get funding for your business idea and launch it to market:

  • Government Start Up Loan scheme
  • Crowdfunding
  • Angel investors
  • Bank loans
  • Small business grants
  • Family and friends

Read on to find out more. Plus, we’ll share how Countingup can help you manage your new business’ finances.

Government Start Up Loan scheme 

This government-backed scheme was launched in 2012 to enable entrepreneurs to get their businesses up and running. With this personal loan, you could borrow any amount between £500-25,000, which can be paid off over one to five years. 

However, in order to have a successful application, you’ll need to be able to provide a detailed business plan and cash-flow forecast. This is to show your business will be able to afford the repayments (which charge a fixed interest rate of 6% per year).

This method of financial backing is particularly advantageous for new entrepreneurs because, if you’re approved for the loan, you’ll also be paired with a business mentor for 12 months.

Find out more by visiting the gov.uk website.

Crowdfunding

Crowdfunding has taken off significantly over the last decade and shows no signs of slowing down, with the global market projected to reach $300bn by 2030. That’s why increasing numbers of entrepreneurs and small business owners are viewing this as a viable option for financing their companies’ launch. 

Although this is a more modern way of sourcing capital for your business, the good news is that you don’t necessarily need to be tech-savvy. Instead, what you will need is a compelling pitch that people will want to buy into, which is arguably the trickiest part.

If you manage to run a successful crowdfunding campaign, you will end up with capital that you don’t need to pay back to investors, which is a huge boost. You will also have built up a base of potential customers who truly believe in your product or service before you’ve even launched it. 

Angel investors

When you’re starting up a new business, you may feel like you need a guardian angel at times. Failing that, the next best thing is an angel investor.

Angel investors are wealthy individuals, many of whom own successful businesses themselves, who are willing to invest in start-ups in their infancy. Whilst you can pitch directly to an investor, the standard route is to do this via an angel investment network that specialises in your business type or industry.

The main challenge with securing this type of capital is convincing the investors that your business is worth investing in since there is a lot of healthy competition out there. Again, you will need to be able to provide a solid business plan, which demonstrates you will be able to make a good return.

Bank loans

Offering a more traditional route than some of the others on this list, a bank loan could be an attractive option for entrepreneurs with strong business plans and a good credit history.

The main benefit for many people who decide to take out a bank loan is that they are able to get a boost to their cash-flow, whilst maintaining full control over their company. Unlike other funding options where investors are involved, the bank has no say over your business as long as you are making your repayments on time. 

Small business grants

Regardless of what industry you operate in, there is likely to be a business grant available to help you on your way. And, unlike a loan, you aren’t expected to pay it back.

A good way to go about finding a grant that is specific to your business idea is to use the UK Government’s online tool, which you can do by selecting the ‘grants’ tick box. This will allow you to filter by how long you’ve been trading, number of employees, industry and location.

However, the primary drawback to using this method of securing capital for your business is the fierce competition and, often, lengthy process. Despite this, many entrepreneurs see it as a reasonable trade-off for retaining equity of their business.

Family and friends

Whilst some entrepreneurs may not feel comfortable with the prospect of borrowing from their friends and family, it’s certainly not unheard of. In fact, some of the most successful businesses began in this way.

Yes, there may potentially be some bickering somewhere down the line, but by borrowing from people you trust, there’s a good chance you won’t have to pay any interest. Whilst this can be beneficial, the main thing you need to consider here is how much you need to borrow and whether you’re prepared to ask your loved ones to help you out. 

For those looking to borrow a heftier sum, traditional routes are often more feasible.

Keep track of your business finances with Countingup

When you’re a new business owner, the last thing you need is to get bogged down with time-consuming admin. That’s why we created the Countingup app, which automates your financial processes in the palm of your hand. 

By setting up your business current account with Countingup, you can take advantage of free built-in accounting software, where you’ll receive real-time insights into your business finances, profit and loss reports, tax estimates and instant invoices.

Download the Countingup app here today so that you can spend more time focussing on what you do best.