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Money is an important factor in any business. It helps to fuel your business from the moment you conceptualise the idea in your mind up until the time it can generate revenue. According to recent research studies, at least 94% of all new businesses fail in the first year, mostly due to lack of funding. 

Many entrepreneurs lack access to the necessary funding needed to grow their businesses. This is especially true when trying to access funding from traditional lenders like banks and micro-financing institutions. Luckily, your funding options are no longer limited to traditional lending institutions.

Today, there are easier and more creative ways businesses can find funding. Business finance experts Lendingexpert.co.uk offer 5 Finance options to help fuel the growth of your business: 

  1. Credit Card Stacking

    Credit card stacking provides a fairly inexpensive and fast funding option that is ideal for low-revenue startups and enterprises. This approach allows you to use multiple credit cards that have a total credit limit that equals the amount of money you need to finance your business. Due to the negative perceptions around credit cards, this practice is mostly referred to as unsecured business credit lines by lenders. Regardless of the bad rap, if used responsibly, smart credit card stacking can be useful in funding your business. What’s more, you can benefit from features like low 0% introductory rates and reward programs.  

    2.  Invoice Financing

    Invoice financing, also known as factoring, can be your business’s best friend. Invoice financing allows you to use unpaid invoices to gain access to working capital. It helps speed up cash flow and frees up the time you spend chasing bad debts. Factoring is highly recommended for growing businesses as the amount a company can borrow increases with sales.  It allows a company to fund its growth, especially if they are needed to pay for supplies before getting their first payment from customers. Secondly, this funding option does not require a business to provide an asset to secure a loan. However, it is crucial to understand that the lenders will impose a charge on each invoice you provide. Hence, your profit margin will reduce. 

3.Crowdfunding

Crowdfunding is an alternative way of raising funds for businesses. It lets members of the public pool their resources together to help enterprises hit their fundraising target. This could be ten people putting in £100 each, or 1,000 people each giving £10. These donors or investors can be found on sites like Crowdcube or Kickstarter. When it comes to crowdfunding, business owners have two options; 

  • Equity crowdfunding: This involves giving a portion of your business to investors. 

  • Reward crowdfunding: This is the exchange of a reward, be it a product, service or even a thank you note for capital.  Equity crowdfunding is more appealing to fast-growing industries since it allows investors to grow their money for as much as five times or even more. Reward funding, on the other hand, serves as a way to acquire funding as well as endorse your business. This way you are more likely to reach a whole new set of potential consumers. Today, companies can even get niche crowdfunding sites that are highly capable of meeting your needs. 

4.   Angel Investor

Angel investors are successful entrepreneurs who put money into a business in exchange for ownership equity. If your company manages to impress an angel investor, they may provide funding in return for an equity stake. Most of these angels are seasoned entrepreneurs, so they understand what you are going to do and are highly likely to be patient. What’s more, the process of finding and enticing an angel investor is far less daunting than most people think. As long as you can put in a tight pitch, with realistic goals and growth projections, and are prepared to give up a share of your business, this could be the right financing option.  

5.  Bootstrapping

Bootstrapping, also known as self-funding, is an effective way to finance your business, especially when you are just getting started. It provides an excellent way to grow a creative and agile business. For many businesses, bootstrapping takes out the risk and the pressure of having an investor watch your every move and the stress of having interest-heavy loans to pay back.  This is because it does away with loans, equity, and other traditional funding options while choosing to finance your own business from your savings and any additional funds at hand. This funding idea is ideal for businesses that don't require much capital from the start.   Before choosing a funding option, it is crucial that you take the time to analyse their advantages and disadvantages. This way, you are better placed to select a funding option that can help fuel the growth of your business.

For a more in-depth guide to business loans, finance and other options visit: https://www.lendingexpert.co.uk/business-loans-experts-guide/

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