Starting a business in the current economic climate, with Brexit looming, is a challenge – some would say an impossible way. But innovation stops for nobody, so entrepreneurs planning to launch a business only have one thing in their way – financial limitations. Funding a start-up business is extremely difficult because there is no way to prove if a business will be profitable or not. Lending to a start-up is tremendously risky, and many banks and financial institutions are not willing to take that risk.
So without the help of a bank loan, how can a start-up get off the ground? Start-up finance is a niche and can be a difficult uphill struggle, but there are a range of investment options to explore as a new business. Securing the funding is a vital step to launching your business idea – here are some ways to finance a start-up business.
Government backed loan
Believe it or not, the government has noticed how difficult it is for start-ups to be approved for finance, and has launched some initiatives to keep new businesses forming. A government-backed start up loan lets you borrow up to £25,000 at a low interest rate, while offering free business support. You might also be eligible for local funding depending on your location and the type of business you plan to launch.
Alternative finance solutions
A traditional loan isn’t the only way start-ups can access finance. Thanks to the rise in alternative finance solutions, businesses can apply for peer to peer lending and other specific products which can be tailored to fir each individual business. Of course, start-ups can also take their idea to the worldwide web on platforms such as Kickstarter, or search for angel investors. If you’re determined enough, you’ll find a provider or investor to approve your finance.
If you don’t need a large sum of money to get the business started, it might be worthwhile using a bank overdraft. However it’s always important to work out how much you will be charged for using the overdraft facility, and how long you’ll rely on it before turning a profit. Overdrafts are put in place for short term lending, and can be very expensive if you stay in the red for a long period of time.
Borrowing cash as a start-up is risky business, but be persistent and you should be able to secure finance from somewhere, or someone. If you need help exploring the options give the Genie Lending finance experts a call.