When it comes to starting a business or growing an existing one, one of the biggest issues that people face is how to finance the business. There are lots of different options available and some of them may be more appropriate than others. It is important that you consider all the advantages and disadvantages of all the financing options that are available to you and a good place to start is to speak with your Gloucester accountants to see what their thoughts are. They will be able to talk you through the impacts that there might be on your business both from a positive and negative aspect.
Here are some funding options that are available to businesses.
- Bank loans – this is a common choice for people looking to expand their business and in some cases for startups, although it is much riskier to use this option as a start-up business. There are lots of different loan types available and all with varying degrees of risk and interest rates. All businesses will need to make a business case for the loan and will have to provide information on the financial position of the company and its growth potential and this is where your Gloucester accountants will be able to help you prepare any documents and forecasts that are needed.
- Crowdfunding – this has become a popular way for businesses to finance new projects or products. There are two main ways this can be achieved the first is through peer-to-peer lending which is essentially, members of the public lending you the money and the other is through equity. The equity option is the most popular and crowdfunding is a good way for high growth businesses to acquire funding. The one downside of crowdfunding is that it can take a long time for you to reach your target amount and so it is not suitable for situations where you need money in a short amount of time.
- Business Angels – these are people who are wealthy in their own right and are looking to invest in a business and in return gain a percentage of the business. It works on the same principle as every business that steps into the Dragon’s Den asking for investment. As the investors are looking for equity in the business it is not an option that is suitable for people who are looking retain 100% ownership of the business.
- Research and Development Grants – if you are looking for funding for a particular project or the development of a particular product or service you might be eligible for a research and development grant. There are often strict criteria around these grants, but the money does not have to be repaid and you do not have to surround any equity your business.