Every business requires funding for growth and momentum. It could be an SME or a large enterprise. Money is crucial to streamline the operational flow else the startup collapses. It is why every new or mid-stage business often thinks- How do I finance my startup?

The ways to finance your startup rest on the nature and the industry of the startup. You may receive good funding if you are a medical or technical startup. Before going for funding, a business must analyze the aspects it needs funding for.

The blog states some of the best funding options for startups regardless of the industry.

How to choose the right funding mode for your startup?

There are different ways to finance your startup. You can finance your business in 3 ways:

• Borrow money or pay later
• Sell equity shares in your company
• Get a sum in exchange for the equipment, invoices, or machinery

How to choose the correct option among these?

Some factors may help you determine the suitable mode of funding for your business:

• The size of the firm
• The amount you need
• The nature of the growth plans
• How much control do you need?

6 Ways to get funds to scale business

The first step to starting a business on a good note has a thorough funding plan. For first-time entrepreneurs, the task could be tiresome. However, when you know the options to tap, the route becomes easy:

1)     Check out the relevant loans

There are multiple business loans available for startups and entrepreneurs to tap into. Identify the existing business situations- stats, capital, and assets and choose the right. You can check a 10000-pound loan for over 5 years if you want flexibility over repayment and need funds immediately. These loans are ideal for funding any significant expense or a business deal.

These loans could be an excellent option to get your business. Compare the deals from different business loan lenders and choose the one that perfectly fits your business nature and revenue gear. Some startups having sound business plans may qualify even with bad credit.

2)     Peer-to-peer lending

It is a type of business funding that eliminates any intermediaries. The lender and the business engaged in an agreement agrees on a profit percentage. Here lenders share much flexibility and limit the risk of default by providing loans at competitive interest rates. The lender here becomes the investment for the business. It is one of the best ways to finance your startup.

3)     Equity Crowdfunding

It implies raising funds from the public by providing equity in exchange. If the startup turns out to be a successful venture, the investors may benefit and vice-versa. It is also a great way to get advocators for the brand. If the product turns out to be successful, these advocates can help the business grow with word-of-mouth marketing.

Equity crowdfunding is a good option for a startup with limited funds but great product potential. Moreover, it grants credibility to the company, and it grows. It dilutes any risk for the investors to lose their money.

4)     Tap Government programs for startup business

The government in the UK provides grants and loans for new businesses to grow.

These are known as Direct Grants.

It is essential for early-stage startups requiring funds for training, purchasing equipment, or hiring. However, a business must provide 50% of the value to get these. If a startup meets the eligibility criteria, it can qualify for up to £500,000. It is more than sufficient to attend to important aspects of your startup and optimize procedures for growth.

Apart from direct grants, there are other options that government provides:

a)     Equity Finance

It is when a startup sells a business share for cash requirement. The government’s Seed Enterprise Investment Scheme provides up to a 50% reduction in income tax on investments made in new businesses for up to £100000. To qualify for this program, a company must have less than 25 employees and less than two years of operating history.

b)     Soft loan

A soft loan generally operates like a grant only. If you are a business with no credit history and in the months of your new business, check this. Here, you may qualify for lower interest rates and reasonable terms. The government startup loans scheme offers up to £25000 at a 6% interest rate. Apart from this, you may leverage business mentoring and support.

However, these loans have specific criteria to qualify, and not all startups may leverage them. In such a situation, one must have something to bank upon with some guaranteed assistance. Consider loans on guaranteed approval in the UK for your minimal cash requirements. Whether you started your business a few months back or an established startup, you can continuously tap these for any business requirement.

5)     Raise funds by winning the contest

It is one of the exciting ways to finance your startup. And it grants a business an opportunity to make a mark among a vast audience. It helps new businesses and entrepreneurs develop a product. It would help if you projected the contest creatively.  

You can present your ideas in an innovative business pitch or through a described business plan. The statement must be unique to capture the eye of the investors and the audience. If you make it, you may get massive media coverage. Thus, if your business idea/services/products share the potential to gather range, try it. Moreover, winning a contest comes with a massive price of money that may be sufficient to fund your initial and critical business requirements.

6)     Angel Investors

Angel investors are usually high-net-worth individuals who invest in an early-stage business. It is also called seed funding. It is ideal if you are looking for guidance and funding as an initial operational business. Often, it could prove an excellent decision to have one beside you. An angel investor ensures steady growth in the company it invests in.

Bottom line

Cost and convenience are just some of the factors to grow a business. You must seek ways to finance a startup. Identify the business industry and nature. Choose the right according to your business stage, experience, and growth goals.