If you’re starting up a business or your company needs a cash injection, then you’ll need to apply for business finance. Bank lending figures are continuing to fall, so you might be wasting your time applying for a business loan from a bank. However, entrepreneurs have found plenty of other ways to secure business finance so don’t despair – simply choose one of the options which sound suitable for your requirements.
Borrowing from a family member
If you have a relative with some spare cash in the bank, and they have offered to lend you money to fund your business, then this could be a favourable option. Of course you will bypass the long application process and will probably have little or no interest to pay back. However, consider the implications if you can’t repay the loan, and how it could affect your personal relationship.
Peer to Peer loan
Rather than turning to a bank for a business loan, you could borrow from a private lender. The internet has made this more accessible, with online platforms providing borrowers with a range of affordable options. You might not be able to take out this type of loan if you’re not already trading, however crowdfunding platforms are often willing to fund start-ups.
Government start-up loan
If you’re launching a new company, then you may eligible for a start-up loan from the government. They offer an unsecured loan with a low interest rate, so it’s definitely worth looking at this option before shopping around for other business finance.
If you’re already an established business, then you could be able to borrow large sums of money against your assets. This means that you can get funding which is secured against your business assets such as vehicles or machinery. You can then use the cash where you need it most, such as replacing equipment or improving cash flow.
If you are prepared to give up a share in your business, then the angel investor route may be for you. Think of it as Dragon’s Den – you’ll have to create a pitch and encourage investors to believe in your business and its future. Many angels are entrepreneurs themselves so understand what you’re going through. If you don’t have good credit or have any assets to secure a loan, you may want to offer a percentage of the business instead.
Need to chat to a professional about business finance? Contact our friendly team today to discuss your options.