Guide to funding a new business

Guide to funding a new business

Business StrategyFounder ResourceEntrepreneurship

Key takeaways (read the original full post here):

Remember, if you’re considering business finance, you’ll need to find an option that:

  • you’re eligible for and comfortable with
  • provides enough capital to suit your ambitions
  • has affordable repayment terms

No reputable lender will let you borrow more than you can afford.


Personal investment

Investing your own money to start your business can be the natural first step to financing your dream. If you’re starting a new business, you need to be confident that it’s going to succeed. Investing your own money is a great way to test your commitment to your concept by putting your money where your mouth is.

Family and friends

You might be thinking about asking friends or family for financial help. There may be relatives with available funds to help you out. But be careful with this way to finance your business. There’s more than money on the line here. Relationships can be affected if things go wrong.

Business loans

Many banks offer business loans to help companies grow. However, banks can be risk-averse. This means they might not be as willing to back a new business as they would an established one. But that’s why Start-Up Loans exist!

Start-Up Loans

Start Up Loans are personal loans you use to finance your business. They are specifically designed for new businesses that have been trading for less than two years. They’re supported by the Government as an alternative to traditional business loans.

Peer-to-peer lenders

Instead of coming from a bank or the government, P2P money comes from individuals. People invest their money in a peer-to-peer lending scheme and the lender allocates it to loan recipients. It’s a way for individuals to achieve a better financial return compared to putting their savings in the bank. For borrowers, there’s little difference compared to a standard loan. Often, due to P2P lenders operating mostly online, they have lower overheads and can offer attractive interest rates as a result.

Business grants

Some non-repayable business grants still exist, but they are quite rare. They are usually only available for businesses that meet certain criteria. Applying for grants can be highly competitive and you need to be prepared to make a strong case for your business. Remember to research eligibility criteria and provide evidence to demonstrate each one.

Equity investment

This is when business angels or venture capitalists provide financial investment in exchange for a share of your company. You’ll receive a much-needed cash injection for your business, as well as benefiting from your backers’ expertise and contacts. This can help you manage and grow your business. Obviously, this sort of investment is highly sought after and can be extremely competitive.


When people who need money post about their idea or issue online and ask investors to make a contribution. This usually takes place via a specific crowdfunding platform, which helps the people build and promote their appeal, whilst taking a small cut of the money raised.

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