It can be frustrating if you have incredible plans to grow your business, but you do not have enough cash available due to the cost of running your current day-to-day operations. However, instead of halting your businesses growth, there is opportunity to receive investment from a variety of funding sources, either through borrowing or investors. If you are certain on your business goals, can clearly communicate your business plans and can provide evidence for how they will be successful through a business plan or pitch, we have summarized some of the fund raising options that could be available to you:
If you have a customer-facing business, with an idea which will provide benefits or resonate with a wide variety of people, you may want to consider crowdfunding as an option. Those who believe your business idea will be a success will make a micro-investment for a small stake in your business. Some crowdfunding sites include GoFundMe, Kickstarter or Indiegogo.
Angel investors are usually found within family or friends. They can offer financial backing for ownership equity in the company, which will occur through a one-time investment to help your business to implement your new ideas.
Your business may be eligible for small business grants, which can cover implementation costs such as premises, equipment or machinery. If you want to explore this option for your business, at Bedford Accountants we will be happy to discuss your eligibility or help you in the application process.
Although the application process can be complicated, there is an option to borrow your required funds from the bank, as long as you will be able to meet the repayment terms. If you are able to communicate to the bank exactly what assets you need to purchase to implement your new operations, your application will be more likely to be successful.
Business Cash Advance
Whereas a standard loan will provide you with a lump sum (which you will repay with interest over a period of time), a business cash advance involves a fixed repayment sum on your future sales. For example, your lender may offer the sum of £10,000. In return, they may request that you repay them with 20% of your revenue, until you reach the figure of £14,000. This could be a more flexible option for you, as the figure you repay to your lender will go up or down, based on the success of your business that month.
We hope that this has provided some clarity of some of the many options available to you to fund your new business ideas. We understand that applying for funding can be intimidating or complicated, so if you require any further guidance about what option would be best for your business, please do not hesitate to get in touch.