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If your business does not qualify for a grant, but you still need to get some capital to boost your business, then you may want to consider a business loan. There are many ways to access loan funding, and your business bank will likely be your first port of call.
However, there are alternatives, like getting investors to buy into your company in return for equity, plus crowdfunding propositions such as those offered by Crowdfunder, Kickstarter and Funding Circle. Whether or not these are the right choice for your business depends very much on what type of funding you need, what your business does and what you may have to offer someone who donates to your campaign. But let’s take these in order.
The traditional way for a business to access loan funding is through a business bank. Often your bank will be best placed to help you with a loan, but it may result in you paying more than necessary in interest. So, as always, shopping around is a good idea.
Numerous sites can provide business loan comparisons, allowing you to see what might be available to you. Some can give you a loan within a few days, and you can choose the length of time you want to pay the loan back. You can search on the internet for ‘business loan comparison’ to get an idea of how much these loans would cost you. Remember, though; your bank could still be the cheapest, so check there too.
The downside of the loan is that you will pay interest on the amount you borrow and have to pay the capital back over time. It can help you in the short term to get over a cash flow issue if that is the problem. However, you do not want to put your business in a hole, so make sure you can repay the loan if you get one.
Investors can boost a business’s ability to grow not just by providing a much-needed cash injection, but with the right partner, you may benefit from business expertise too. How much of your business you would need to give away to make an investor interested will depend on what you are offering and how big a risk they are taking. One thing is for sure – the more you ask for, the less of your company you will own once a deal is done.
Getting investment into a business can be game-changing, and it could provide the accelerated growth your company needs. You must ensure the terms of any investment deal are right, so speak to your accountant and ensure they are closely involved in any discussions before you sign any paperwork. They will also help you to offer the right amount of equity in the business at the right price.
If you prefer not to have to pay back the money you have been given, then you also have the option of crowdfunding. How and what you offer to those people prepared to buy into your business in return for their cash will depend on what your business does and how it works.
For example, if you are a designer or a small marketing agency, you may want to offer an exclusive design or a day’s marketing support in return. With crowdfunding, you can be very creative in raising funds. But you need to work within the rules of the platform you choose, so make sure you know what you can and cannot do before signing up.
If you are unsure about the best way to get new funding for your business, then speak to us, and we will help you through the process to get the right financing for you.