Small Business Funding
All businesses need capital to start up and many will need injections of cash from time to time to keep a positive cash flow, so vital to the long term survival of a small business.
Fortunately, in the UK, there is a wealth of options for funding small business ventures and this article examines some of them.
Non-Repayable Grants for Small Businesses
Government help for small businesses has often been available in the UK, in the form of government grants and schemes. Way back in the early 80's I started a small sound recording and music production business with just such funding, and this kind of help is still available to small businesses today.
Government grants are usually for start-up businesses only, so if your business has been running for a while you may need to look elsewhere. They also tend to have strict terms and conditions which, if not adhered to, can result in you having to pay back the grant. Under normal circumstances most of these grants do not have to be paid back as long as you do not break the terms and conditions.
The Prince's Trust: For young people under 25 the Princes Trust can be a source of free advice and funding. They provide two kinds of grant: 'Community Cash Awards', which assist in setting up a project that will benefit your community (which could be a small business bringing employment to the area) and 'Development Awards', which can help you with training, buying equipment and tools for your start-up business. To be eligible for these grants you will have to be 25 or under and not currently employed or undergoing training. You can find more information on their website at http://www.princes-trust.org.uk
Direct Government Grants: There are a wealth of schemes available in the UK especially in the designated 'assisted areas', which are seen as having a special need for business development. If you are within one of these areas you will have a greater range of grants to apply for.
The application procedure can be daunting and lengthy. This is partly designed to test the mettle of the applicants and to weed out the ones who don't have the commitment or stomach for running their own business, so persevere if you have both!
European Union Grants: Since the UK joined the EU its citizens can take advantage of the numerous grants to assist small business that are available, mostly through the EUROPEAN REGIONAL DEVELOPMENT FUND (ERDF). The EU places great importance in Small to Medium Sized Businesses (SME's) which currently employ over 65% of the European workforce.
Regional Development Agencies in England, Scottish Enterprise, the Welsh Development Agency and Invest Northern Ireland: Support is also provided through these regional agencies, although the new Coalition Government is planning to them with local enterprise partnerships (LEPs).
Local Authorities, Councils and Development Agencies: These bodies will also offer a range of grants for SMEs and new businesses so be sure to check the opportunities in your area.
Other ways to fund your Business
Use your savings: If you have confidence in your new business this may be the time to put your money where your mouth is. If you have savings you may want to use them, depending on your individual circumstances. It is, of course, much easier to do this if you are single and have few family responsibilities.
Get a loan: Banks and other financial institutions will often be prepared to lend money to small businesses if you have a sound business plan or have been running for a number of years and have a good financial track record.
Find investors: If you have a really good business idea you may be able to sell it to investors who will put up the cash to get you started. The idea must be really solid and you must have the personality to sell it to your 'Business Angels'. If you have seen the popular BBC series 'Dragon's Den', on which a group of hopeful entrepreneurs attempt to charm money from a group of hard-headed business investors you will realise how difficult this can be in practise.
Further information about funding from all these agencies and other sources is available from organisations such a Business Link and websites such as www.smallbusiness.co.uk.