Key Ways to Access Business Funding

Starting a new business or expanding an existing one often requires substantial funding. Securing the right finance at each stage of your business journey is crucial for success. But where can you find the necessary funds?

Five Ways to Access the Right Funding

Here are five key funding options to consider:

1: Bank Loans and Overdrafts

Traditionally, banks have been the primary source of business funding. Business loans allow you to borrow large sums and repay them over time in manageable instalments. Extending an overdraft can also provide additional credit. However, banks are now more cautious and require strong evidence of your ability to repay.

• Pros: Ability to borrow large sums.
• Cons: Strict lending criteria and potential requirements for collateral.

2: Private Investors

High-net-worth individuals can be a valuable funding source, especially if traditional bank loans are not an option. Private investors may offer substantial funding but often expect equity in your business and a say in its management. They also seek a good return on their investment.

• Pros: Large funding amounts and more flexible criteria.
• Cons: Finding investors can be challenging, and they expect a significant return on investment.

3: Business Loan Providers and Niche Industry Lenders

Specialist lenders focus on particular sectors or stages of business growth. They often have less stringent criteria and more flexible repayment terms than traditional banks. These lenders are worth considering if you’re in a niche market or need quick funds.

• Pros: More flexible terms and less stringent criteria.
• Cons: Higher interest rates and the potential need for collateral.

4: R&D Tax Credits

Government incentives like R&D tax credits can offset costs associated with research and development. These credits reduce your corporation tax bill, freeing up funds for reinvestment in your business. Read more about R&D tax incentives here.

• Pros: Offsets R&D costs and can be claimed retrospectively.
• Cons: The application process can be complex and time-consuming. (but we can assist you and simplify this process by preparing and lodging the R&D claims)

5: Government Loans and Tax Incentives

Various government schemes offer loans, grants, and tax incentives for starting or expanding businesses. These can be used for diverse purposes, including job creation. Requirements vary by country and region, so research or consult with advisers to find the best options for your location. Read more about government tax incentives here.

• Pros: Valuable funding, with some grants not requiring repayment.
• Cons: Must meet specific criteria; application processes can be intricate.

Talk to Us About Your Funding Strategy

A well-defined funding strategy is essential for navigating your business’s financial needs. The right funding routes will depend on your business goals, repayment capacity, and risk profile.

As your adviser, we can guide you through available funding options, providing tailored advice on the most effective routes for your business.