Six sources of funding to grow your business

LaunchCategory
5 min read
Jessie Day

Every year, grants, loans and alternative funding provide hundreds of millions of pounds in growth finance for UK small businesses. Good news for an ambitious start-up, but how can you take advantage?

Here, we’ll cover off the top six funding sources for small UK businesses right now, with a few examples to get your research started.

Get support with a start-up loan

You may have noticed that small businesses and self-employed people are all over the big banks’ advertising right now. And for good reason; small-to-medium-sized enterprises (SMEs) make up a key part of the working population.

The numbers are only growing, and with that comes choice. But with literally thousands of options, where do you start?

That depends on a few key questions. Before you start approaching banks and lenders, get straight with how long you need the money for, how much you need, and what is going to be your security, in order to secure your loan.

Banks will ask these questions almost straight off the bat, so being prepared is key. Remember though, this is positive; you’re asking for money to grow your business. It’s as much about what the lender can do for you, so research, compare and ask around.

Start Up Loans could be a good place to start. They’re independent, and the organisation has years of experience in supporting small businesses.

Applying for a government grant

Grants are available, and yes it can be difficult to stay on top of what’s currently ‘live’, but if you can get a good application together, it’s a valuable source of funding.

The Regional Growth Fund (RGF) is worth looking at. Check what’s live right now in your area. There’s an easy-to-use live RGF programmes list on gov.uk and tick off your eligibility using their list too. You’ll need to be based in England to access the RGF, but there’s a great tool on gov.uk for UK-wide funding support as well.

Other government funding is available. Check out the UK Export Finance site for support with going international (they can help with insurance too) or the list of people you can contact directly, who are financed by the government’s Business Finance Partnership, and ready to lend.

A bank loan and overdraft

You could pop in to any high street bank branch, and ask for an appointment with their small business banking representative. Even if that branch doesn’t cover small business facilities, they should be able to point you to the nearest one that does, and give you some paperwork to read.

Banks may brand their SME financing as a ‘fund’, ‘scheme’ or ‘programme’ (and some campaigns may float your boat more than others), but in reality, any financing will be in the form of a loan, and an overdraft, so pretty traditional.

All the usual suspects will have a bank loan for small business package, so do an online business bank account comparison with a service like MoneySavingExpert before you hit the high street.

If you’re a little way down the line, venture capital may suit your business better. Either way, the British Private Equity & Venture Capital Association is worth a look.

Incubators and accelerators

You know something’s hot when it involves the word ‘incubator’. And right now, SME facilitation is hot property, for brands, boroughs and bigger businesses.

Incubators provide office space and support (which can include funding) for small businesses, plus a ready-made networking hotbed. Accelerators do much the same, but on a temporary-basis, helping small businesses focus on growth over a period of weeks, or months.

Finding an incubator or accelerator that works for your set-up is pretty easy. You just need to research and get yourself used to an external space, rather than your kitchen table office.

Funding can be part of the discussion if that’s what you’re after. A quick Google search will yield some comprehensive lists of who to approach, and incubators are a big part of many regional or local business support centres and networks.

Asking family or friends for a business loan

Whether it’s a grand for a new laptop or a much bigger, growth-intended loan, the clear advantage with sorting out a family loan is just that, familiarity. There are no rigorous application procedures or interviews (or maybe there are, and kudos if so!), and you can probably rely on less stringent repayment terms.

However, the phrase ‘money and friends don’t mix’ is worth considering, if not heeding. If you’re asking family or friends to part with cash to fund your business, they (and you) must set out clear terms, and an expected repayment schedule, as appropriate. Consider taking legal advice if it’s a bigger loan, and set everything out in writing, so that you can revisit and enjoy watching the business grow, from the same page.