Whether you’re looking for a small startup loan or you need funding to expand into a new market, securing finance for your business can be challenging.

Investors and lenders will want a good return on their investment, so you’ll need to demonstrate that your business has potential and that their money is in capable hands.

It’s also vital to consider all your funding options, as the right source of finance will vary depending on your circumstances.

Here’s how to get finance for your business.


Types of finance

There are many different ways to finance your business, and you’ll need to ask yourself several questions to identify your best options.

How much money do you need – and how soon can you pay it back? Do you want a business loan or would you prefer to find an angel investor in exchange for a stake in your company? Are you eligible to claim any Government grants?


Business loans

Many banks offer business loans to help companies invest and grow. Generally speaking, established companies are more likely to secure this kind of loan, as banks often regard startups and self-employed businesses as higher risk.

If you want to finance your business in this way, you’ll need to detail how you intend to use the loan and demonstrate that your business will be able to afford the repayments.

The size and terms of your loan will vary from bank to bank and from business to business. For example, you may need to offer assets as security against the loan before your application is approved.

Doing this can also help you negotiate more generous repayment terms – but you should always speak to a financial adviser before making commitments of this nature.


Angel investors and venture capitalists

Some individuals will provide funding in exchange for a stake in the business. This is known as angel investing.

Most angel investors are entrepreneurs themselves, so they can often offer valuable insights to help you move your business forward. In exchange for their financial support and expert advice, however, you’ll usually need to give up some control in your company.


Government-backed loans

Startup loan

If you want to start a new business or your business is less than three years old, you may be able to secure a Government-backed startup loan.

Startup loans start at £500 and go up to £25,000, and you’ll need to repay the loan within one to five years at a fixed interest rate of 6% per year.

Unlike most business loans, these Government-backed loans are unsecured. That means you don’t need to use any assets (such as your house) as collateral. However, you will need to pass a credit check.

It’s also worth noting that you can only use the loan to fund the initial cost of starting and developing your business.

Other Government funding

It’s not just startups that can benefit from Government support. You may be able to access various grants, schemes and other Government-backed funding depending on your business’s size, industry and location.

You can find out whether you’re eligible for any business finance schemes on the Government website.


How can I secure funding?

You’ll need to adjust your strategy depending on the kind of finance you’re seeking. However, most investors and lenders will want you to do the following:


Make a business plan

It’s difficult to secure funding without a solid business plan. Drawing up a realistic strategy with realistic goals and financial projections can inspire confidence from high-street banks and angel investors alike.

Your business plan also gives you the opportunity to demonstrate your business acumen and explain what makes your firm stand out from the crowd.

The Prince’s Trust provides some useful business plan templates here, but it can be a drawn-out process – especially if you’ve never written a business plan before. Accessing expert business planning services can make the process much easier and less time-consuming.


Know how much you need

Before you meet with any lenders or investors, you should work out how much funding you need to achieve your business goals.

Prospective investors and lenders will want to know how you plan to grow your business and make them money, so be prepared to answer questions about your spending plans, growth strategy, forecasts, KPIs and more.

The better informed you are, the easier it’ll be to get the funding you need.


Work with the right people

The most important thing is to work with reputable lenders or investors who can offer you reasonable terms. Remember, trustworthy organisations and individuals will never lend you more money than you can be expected to repay.

We’d also recommend speaking to a financial adviser before finalising any decisions – especially if you’re borrowing a large sum. An experienced professional can help you weigh up the risks and opportunities each option brings so you can get the best deal possible.

Need funding for your business? Get in touch with us for expert advice on your finance options.