What are the best ways of finding funding for my business

Cash flow is one of the most important factors when it comes to running your business. You need funding in to grow the business, purchase new equipment, pay for advertising, and get new premises, every business needs money to function and grow. There are a number of business grants available for businesses that are awarded in order to help a business develop and grow.

There are lots of other ways to get funding for your business including loans, investors and more. In recent years online crowdfunding has become more popular, you can raise millions with the right approach without giving up any equity.

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What grants can I get for my business in the UK?

You might be surprised to hear that there are a lot of business grants available in the UK. Many are aimed at specific industries, locations, communities or types of businesses.

What is a business grant?

A business grant is a sum of money given to an individual or business by the government, a company or philanthropists. They are normally non-repayable, and you shouldn’t have to give any equity on your business in return for it. Business grants are normally aimed at certain types of businesses, geographic locations, age groups and communities.

For example, some grants are only available from a local council that you live in, or some are available for certain age groups.

A business grant to help accelerate your business

Local business grant

Many local councils and parts of the UK have small business grants. Your chamber of commerce usually has grants available for small or start-up businesses. These organisations are there to support small businesses and companies in a number of ways. They are often there to share knowledge, create a network of businesses, and offer financial advice, and business support, many have some kind of resource hub. A local business grant often is around £500 – £2000 depending on the business and a number of other factors, you may also have to take part in some kind of business course.

The purpose of the local chamber of commerce is to help the local economy. Small businesses are the backbone of the UK economy so the more the government supports them, the more spare money people have, so the more they are likely to spend and business from other businesses. If you are unsure who your local chamber of commerce is visit this site. It has a great map that shows you exactly where you can get local business grants. Once you found it take a look around the website, and see what grants and business support they have to offer.

Another good place to find business grants in your local area is by visiting the Government website, they have a list of all of the grants available across the country. Click here

Start-up and small business grants that you might be eligible for

There are tonnes of start-up and small business grants that you could be eligible for. Make sure you read all the terms and conditions for these grants and make sure your arent applying for a business loan.

The Princes Trust Business Grant

The Princes Trust is for younger business owners aged between 16 and 30. They provide lots of business support, from helping you build up confidence, to offering support in starting your business. They also provide grants of around £250, but they also offer support in getting more funding for your business. It’s a great place to start if you are eligible.

Innovation Grants

If your business is developing a product, service or process that has new and innovative ideas then you might be eligible for this grant. This is part of a business called Innovate UK, which gives away £25 million to the most innovative, game-changing ideas. They have fairly strict criteria to apply but it’s defiantly worth looking into if you think might apply! You can get up to £250,000 worth of funding if you are successful.

Research and Development tax reliefs

This isn’t technically a grant but it can help a business massively in terms of extra cash flow. This project is designed to help companies that work on new, innovative technology and science, it can be claimed if you are doing research or developing something new, you can even claim if the project was a failure. To claim it, your business needs to be part of a project that involves advancing in science or technology. Read more about it here.

Online Funding Platforms

In recent years the number of online funding platforms has grown. They have become a great way of funding a project without the need to pitch to investors or apply for any complicated grant. You are essentially using the power of the internet to fund your business or idea. Your business can amass a huge amount of money from lots of different people around the world if they believe in what you are doing. There are a few different ways you can use crowdfunding:

Equity-Based Crowdfunding

This type of crowdfunding involves giving away a small (or large) per cent of the company. This works if you have a business that people can get behind and believe in. A great thing amount this kind of crowdfunding is that it’s very accessible for the average person, and they can become part of a company that they love. Or if they are simply looking to make money, they can sell their per cent of the company at a later date for a profit. Of course, there are risks involved as a business might not succeed and could lose its money. The most popular form of Equity-Based Crowdfunding is Seedrs.

For the business, it’s a great way to get more funding and you can control exactly how much equity you want to give away.

Seedr allows you to invest in a business in return for some equtity

Loan-Based Crowdfunding

This works in a similar way to a bank loan, but it’s completely crowd-funded. So the business will use something like FundingCircle, where they ask some potential investors for a loan, the business then has to pay this back at a set amount each month. It works for the business as they might never be able to get a loan from a regular bank and the interest rate is a lot lower. It also works for the individual investing as they get their money back with interest. This type of crowdfunding basically turns lots of people into a crowdfunded bank. The risks are fairly high but the rewards can also be high.

Reward-based Crowdfunding

With this type of funding the business normally offers some kind of pre-order or reward for someone to invest. This reward could be an early version of a product that they really believe in or want, or just simply some appreciation and a “thanks for supporting us” message. This type of crowdfunding normally involves someone having an idea for a product, book, video game or just about anything, sharing it all over the internet and asking people to pre-order or donate. With crowdfunding sites like Kickstarter, you set your goal, and if within a set period of time you reach that goal you receive those funds to start work on your project. If however, you don’t reach that goal, you get nothing and everyone who has pledged get’s their money back.

This is a great way of getting funding if you have a project that people want and can get behind, but it can be hard to find the reach you need. You often need to have a large audience or “go viral” in order to get a large amount of money.

Kickstarter has rasied $6,158,185,711 for projects around the world (20/07/2022)

Asking Friends and Family for a business investment

Your first port of call for support and investment could be your friends and family, they can either be your biggest supporter or the opposite! If your loved ones believe in your business they may be willing to put some of their money at risk by investing in your business. The advantage of this is that they are unlikely to give you ridiculous interest rates and you won’t be in debt to the bank. But the disadvantage is that it could get very awkward if you lose all of their money!

This option is probably best if your business needs a fairly small sum of money to get started and if the risks a fairly low too. The plus side of this is that you won’t get into debt from any bank and you’ll get the money very quickly. The downside is that mixing money with family and friends could turn very sour if they ask for the money back or you lose it all.

Business Loan

Getting a regular bank loan or overdraft is still a popular option, it’s relatively easy to get one. When used in the right way, it’s a quick and easy way to get a cash injection into the business. There are tonnes of business loads available in the UK, so make sure you do your research before jumping into the first one you find. Forbes has put together a list of the best business loads in the UK, click here to read.

If you have a good history with the bank then they could let you borrow a lot of money, but it’s harder if you have a bad credit score. Some banks offer a low-interest rate for businesses and those with a good credit score, it also means you won’t have to give up the equality of your business from investors.

The downside is that it can take a while to get a decent business load from the bank and if it all goes wrong you will have a lot of money to pay back.

Business Angels

Business Angels or Angels Investors are an individual or groups of people with lots of money that they are looking to invest in a business in order to grow their money. They also offer business support and help to grow your business, if they invest in you, it’s in their best interest for you to do well. Angel Investors will take part of your business’s equity in exchange for their investment, this could be anywhere from 1% all the way up to 50%, depending on the value of the business, how much involvement they have and lots of other factors.

The downsides are that they take part of your business meaning you will have to give them a percentage of the business and you won’t own 100% of it. It can also be very hard to get a business angel investor as they will only invest if they really see the business taking off.

Dragons Den is a great example of Angel Investors

Venture capitalists

Venture Capitalists are similar to Business Angels but instead of a wealthy individual investing, Venture Capitalist are employed by another company to find good investments. They will look very hard at your business to see if it is worth the investment. Venture Capitalists are more likely to invest more than Angel Investors as they are normally bigger firms with more money. Another big difference is that Venture Capitalists normally have greater control over the business. So although you might get more money, you will have less control.

Incubators and accelerators

These programmes are great for businesses to grow and get investments. Incubators are for businesses (or individuals) that are just starting out. Normally the business will go to a co-working space with other businesses. They are there to help the businesses learn and grow, stop them from making big mistakes and generally mentor them to grow as much as possible. Most of the time with both Incubators and accelerators the business will get a business grant. Accelerators are for more established businesses that have a set time frame with the business to help them grow. They will have access to a large network of mentorship, all of this is in exchange for a small piece of equity. These mentors are normally startup executives, industry experts and other investors.

“A lot of that success comes back to the alignment of incentives,” Harris said. “Good programs completely align all parties — at YC all the partners who advise the companies have a stake in their success. We also do as much as we can to limit distractions. We don’t schedule unnecessary meetings, don’t force them to work in a big loud co-working space, etc.”

Get your free coaching sessions today

Thanks for reading how you can get investment and funding for your business in the UK. I hope this clears up any confusion you have on the different types of funding you can get. If you need any more business advice then don’t hesitate to get in touch, you can also get free business coaching taster sessions here.

How to find funding for your business UK