When you think about business development and growth, it is hard to not think about funding. Most business objectives and goals will revolve around money as, without it, a company would not make it outside of its first year. Sales revenue, investments, and funding are all central to how successful a company will become. If you do not already have a considerable personal investment into your business, you’ll want to secure funding for other means. Business loans from a bank are one method but may not be available to everyone. Here are 5 types of alternative business funding to consider.
- Specialist Lenders
If you have not been successful with applying through traditional banks and lenders, there are many specialists available who may be able to help. Not all provide business loans in the same way as a bank does, as many will rely on having good credit and a viable business plan that you can present. The benefit of online specialist lenders is that you find 24/7 loans that can be applied for outside of business hours, many of which are designed for short-term personal lending in emergencies. In terms of business-related funding, if you are someone with a poor credit rating, you could find lenders willing to still help. Start-up loans are an example of a specialist type of lending product that is designed for new businesses that may not necessarily have an extensive credit history.
Raising funds can be achieved through crowdfunding, where your business idea can be promoted to receive small donations from interested members of the public. This can be done through crowdfunding platforms to ensure only those signed up can donate. This type of funding doesn’t involve borrowing money, so there are no repayments or debt to consider. However, you may only be able to raise funds on a smaller level in most cases, although there are sometimes ideas that capture the imagination that people will get behind. If you are seeking larger sums of funding, you may want to consider other options.
- Angel Investors
An angel investor refers to individuals who have the collateral to invest in your business. These are usually entrepreneurs who have had their own success starting with nothing and building a brand, so are primely placed to want to help others do the same. The caveat to an angel investment is that for the money being offered, a share in your company will be expected or a similar guarantee into your future success.
- Government Schemes
You may be able to acquire the funding you need for your business through government-led schemes. This involves applying online through a governmental portal and enables you to borrow up to £25,000 in some cases through an unsecured loan. This means that, unlike a business loan that can be secured against your assets, a government loan scheme has a fixed amount of interest and repayments each month that are not secured to your business. Not every business will be eligible for government schemes, so you will need to check the requirements before applying.
- Asset Finance
An alternative to borrowing cash via a business loan or other funding is to purchase equipment through asset finance. This involves borrowing to cover the cost of expenses, so for example office hardware such as computers, printers etc. This allows businesses to get hold of the resources they need whilst only borrowing against the value of the goods, avoiding having to pay out in full upfront. This can be in the form of a hire purchase or lease agreement so that affordable repayments can be set up. If you have struggled to raise funds elsewhere to purchase business equipment, you could be more successful with asset finance instead.