How to setup a small business without applying for a loan or grant?

14/01/2021Accounting Issues , Business Growth Ideas

Starting a new business needs a substantial amount of cash and backup amount. You may not be able to obtain this amount from the bank or in the form of grants. It really depends on your business and its risk factor. In that case, you will have to turn to alternate options. Funding for a startup business may sound like a task but you can approach it in a simpler way. 

We will see some alternate on how to get funding for startup business options that are better suited for your business

 

Invoice finance

Sometimes it takes longer for your invoice’s payments to clear. If these invoices are due from stable companies that are financially strong and secure then you can sell your invoices. You can do it through auction platforms. This way you can get some big percentages upfront. After that, you can get the full amount in exchange for the administration fee and interests. 

 

Overdraft

If your business’s nature is cyclic and you have a cash flow that is constantly changing, you may need short-term startup funding. You can consider a bank overdraft facility. The bank can facilitate you by giving you the option to pay interest as you drawdown. 

 

Merchant cash advance

A merchant cash advance can be a good alternative. You can take credit card payments and lend against your future revenue on a short-term basis. 

 

Peer-to-peer lending

Peer-to-peer lending will enable you to lend money on better terms and interest rates. You can also get loans with high-risk factors involved in your business. Peer-to-peer lending is different from bank loans where people will grant you loans and you can get loans at a better rate than a bank. 

To secure the loan you will have to put the business information and key data of your company on the website. 

This trend is getting more popular due to its flexible nature and platforms like Zopa and lending works are getting famous in the UK. 

 

Asset financing

Asset financing lets you secure funding against any asset’s value you need to acquire. It can be equipment, real state, or any other asset. There are some specialists who work in this area and you can get to them. Also, a lot of banks have an asset finance facility. 

 

Equity funding

If you are willing to sell a stake in your business, then this option is for you. Equity funding comes in a variety of forms. Some may work individually or you can find a group. Business angels and venture capital funds and private equity houses are also different forms of the same thing. 

If you want cash at the early stages of your business, an angel investor might save you by giving smaller cash amounts. This will keep you going. Venture capitalists also come at the initial stage but they may be your second priority. 

You can get help from private equity in the later stages of your business when you prepare for stock market listing. They will come in larger amounts. 

 

Crowdfunding

You can boost your business with crowdfunding. In crowdfunding, you extend shares or rewards in your business in exchange for funding. You can go to the crowdfunding or crowd cube to explore crowdfunding options. 

Require more assistance in funding for a startup business? Drop us a message!