Most businesses require finance at one stage in their life – usually because the business is expanding and requires more resources, or because the business has hit a rocky patch and needs some money to help get through it and stay afloat.

There are various places you can get finance from, depending on your company’s history. If you have a business which is well-established with a good financial history, you will probably find it easier to get more finance than a new business.

Firstly, you should look to your own finances. Secondly, your friends and family may be willing to lend you some money, or to buy a portion of the business. If neither of these choices are an option, there are other paths you can try:

The bank
About two-thirds of businesses will go looking for backing from a bank. However, there are distinct disadvantages to borrowing from the bank. Most banks will only let you use a secured loan – that is, you must have something such as your house as security against the loan. If you business fails, your home could be at risk. Sometimes the bank can be the only option and they will normally lend up to £100,000 for a new business. For any larger sums, you may be referred to a specialist such as venture capital arms at High Street banks or business angels.

Specialists
Specialists normally only invest in their area of expertise, so it is important to find out a little about various investors before you go to them and ask for money.

You may also be able to get a grant. Check your local business link and local development agencies. The European Union also can provide cash for some small businesses. The Government has a Small Business Service and can lend up to £250,000, however the terms are very stringent.

Universities
Universities and other education establishments have schemes to help new businesses. Some can provide money, whereas others will provide help or advice, such as in legal matters or accounting. Some can even help with accommodation, computers or telephones.

Business Angels
Business Angels are entrepreneurs who often invest in a variety of businesses. They use their own resources and capital to invest small lump sums, normally in return for a portion of shares in the company. The business angel will often also want a say in the way the business is run, and a non-executive seat on the board. Remember that these people are often very successful business-people in their own right and so will probably have really useful ideas that may benefit your business.

Click here to see a list of business financers.

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