Small Business Funding
Where would a small business be without funding? If you are behind a small business then it is more than likely that you have, at some point or another, made steps to go out and look for funding.
Funding can be beneficial for your small business in so many ways – whether you need funding for growing and expanding your business, for starting up your business or to even see your business through an economically problematic time period such as the recession we’re going through right now.
So, surely it’s helpful to be aware of all the possible avenues for funding for your small business so that you can know which directions you can turn if and when you need funding.
Banks and Finance Companies
The obvious choice for funding is obviously banks. Banks are used every day by people who want to get their hands on funding for whatever reason and your business can benefit from bank funding too.
You can get funding from banks through loans and overdrafts for example and through an economic downturn most small businesses are being forced to turn to banks for aid.
You may have taken up this form of funding when starting up your own small business – personal funding is when you put up the money yourself from your own personal funds. Many people using personal funding turn to their own savings and even loans from family and friends.
This form of funding is often the only practical option for many small businesses who don’t have a strong and easily understandable business plan that isn’t appealing to third party investors.
Investors, often called ‘business angels’, are useful for providing funding for small businesses. Investors will often be successful business men and women who are looking for a project that they can invest their money into with the intention of seeing a profit.
Investors will provide your small business with funds and will want shares in the business in return – this differs from bank funding where the bank will charge interest to the loan for example.
Investors however will not only be providing funds but in many cases will also be in a position where they can provide advice and a guiding hand as they have been in similar positions before – an investor can act in a similar way to a mentor which is an extremely useful tool for your small business.
If any of these forms of funding don’t appeal to you and your small business then there are still other options – for example grants are available from both the Government and the private sector.
There are also schemes in place through the Government to aid small businesses specifically through the recession such as the Enterprise Finance Guarantee Scheme which allows small businesses to get their hands on up to £1 million of bank loans.
Have you had difficulty getting funding through the recession? Has our advice helped you out at all? Leave us a comment and let us know…
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