How to secure Start Up funds for your business

You've developed your own business concept and launched it successfully. However, in order to swiftly build your startup into a full-fledged business, you'll need capital, and deciding where to search for crucial cash might be difficult.

Finding funding prospects can be time-consuming and may discourage you from starting a business, but we can promise you that there are numerous options accessible. These options range from popular choices like crowdfunding to startup loans, both of which give the necessary capital for your new starting business.

To assist you in making your selection, we've put together a fast overview that summarises the benefits and drawbacks of the nine most common startup funding sources in the UK.

What are my options for securing funds for my company?
As previously stated, finding fresh funding sources might be tough. With this in mind, we will highlight some options for you to consider as you begin to fund your startup firm.

Start Up Loan Scheme

Anyone wishing to start or expand a small business can apply for a government-backed personal loan of between £500 and £25,000 under the Start Up Loan initiative. The interest rate is set at 6% per year, and the loan can be paid back over a period of one to five years.

To prove that your startup can afford the monthly repayments, you'll need to submit a detailed business plan and cash-flow forecast. If you’re unsure about how to create an effective business plan, read our blog post, “Why a Business Plan is essential and how to write it”.

Once you’re accepted, you'll also be paired with a business mentor for a 12-month period.

Small business grants

Government funds are also available, which are usually project-based and relate to the conservation, renewable energy, social, community, or non-profit sectors. They might be worth anything between £100 and £1 million. If this applies to your company, it's worth thinking about.

You could also look into your local borough's small-business award programmes, as many local governments provide money to new businesses in the area.

Venture capital

A venture capitalist is a person who invests in tiny businesses with strong development potential. These types of investors are involved in almost every major startup success story, although this type of finance is uncommon to most, and is usually only available to organisations that are rapidly expanding or have already received funding from angel investors.

A venture capitalist also plays an important role in the company's operations, often as colleagues or partners. This type of financing, on the other hand, may not be appropriate for those who want to preserve control over their own business.

Angel investors

Angel investors are rich individuals interested in investing in firms in their infancy. Many angel investors have gone on to start their own successful businesses. While you can approach an investor one-on-one, pitching your firm to an angel-investment network is usually a better idea.

Crowdfunding platforms

Small businesses and startups can use crowdfunding to raise funds in exchange for shares, rewards, debt, or nothing at all. Business crowdfunding can help you get funds quickly, but it necessitates a good marketing approach, transparency, and even giving up some equity in your company.

There are two types of crowdfunding:

Consumer-focused

If your company is product-based, crowdfunding through sites like Kickstarter and Indiegogo can help you secure a steady stream of purchases before you ever start manufacturing.

Not only will this provide you with the funds you need to get your startup off the ground, but you won't have to give up any of your company's shares because the investor's reward is the product itself.

Investor-focused

Crowdfunding platforms like Crowdcube and Seedrs allow you to generate funds by converting your backers into shareholders. This is ideal for startups with a non-product-based business model or for small businesses looking to expand.

Because these platforms provide investors equity in your firm, they are more inclined to invest more than a regular consumer.

Regardless of how you wish to fund your startup business, Persona Finance aims to provide vital accounting services for all fledgling firms. We want to add more value to your organisation by handling everything from bookkeeping to tax returns. Please contact Persona Finance at [enquiries@personafinance.co.uk] for further information on our services.