In these difficult economic times, starting up your own business or even keeping an existing one afloat can be a huge challenge. One of the greatest issues that is likely to face you in this regard is commercial funding, which is absolutely crucial to the long-term health of your business.
The good news is that you have plenty of options open to you when it comes to securing business funding. So you shouldn't face too much hardship finding a deal with terms that suit you and your company, and that doesn't place serious pressure on you to make repayments.
Business loans are a common way of bridging a financial gap and can provide an immediate injection of cash that will help your company achieve its short-term goals.
However, you must be wary of the interest rate at which you borrow, as this has the potential to be a problem in the months and years to come once you have started to repay. Despite this, reasons for getting a business loan include the potential to pay for new assets or provide start-up capital.
Loans are not repayable on demand, while they can also be tied to the lifetime of whatever you're using them to buy.
If you're a young entrepreneur and want to start a business, you can apply to the government's Start-Up Loans scheme, which gives out loans of approximately £5,400.
Business loans don't have to be from a bank, but can be from any trusted third party. Should you find someone who is willing to lend you money, Lawpack produces a Business Loan Agreement. This solicitor-approved template outlines the terms of how the loan will be repaid and gets the agreement in writing, without you incurring lawyer fees in getting a contract drawn up.
Making use of an overdraft facility with a bank is another good idea should you need to boost the capital available to your firm. One of the greatest plus points of an overdraft is that you will only borrow exactly what you want to use, so there is no need to pay interest on any surplus cash.
Looking out for an investor is a move that many businesses make. This involves a part of the firm effectively being sold to an outside individual or organisation in exchange for investor finance, which can then be used to carry out vital tasks and acquisitions.
Of course, you must be aware that the investor will then be entitled to a share of the profit your company makes. But on the other hand, they can offer new skills or knowledge to the business, while you will not have to repay interest as you would with a more traditional loan.
If you're of the opinion that a grant would allow you to achieve exactly what you hope to, then it might be worth making an application. UK companies can apply for a grant from the government, the European Union, a local council or charities, so there are plenty of options out there.
The government website lists all the grants businesses can apply for and there are hundreds, so take a look!
As you might expect, there is plenty of competition for grants, but if you are successful it's effectively free money as you will not have to repay it or meet interest repayment demands.
It's clear there are many options on how to get funding for your business, it's simply a case of finding the most effective one for you.
Published on: May 31, 2013