How to Finance Your Business: A Guide for UK Startups

In our previous articles, we’ve explored the foundations of starting your own business. Now, let’s delve into the crucial aspects of business finance.

Understanding Your Funding Needs

Not every business requires a substantial upfront investment. If your startup has a low barrier to entry – meaning you don’t need significant capital to get started – you might be fortunate. However, as your business grows, you’ll likely need additional funds. Let’s explore your options.

Common Funding Options

Business Loans: Traditional bank loans are a common choice for business funding. While high street banks remain popular, a wave of new lenders offers innovative solutions. Be aware that most banks require personal guarantees, so carefully consider this commitment.

If you’re unsure where to start, consider using a business finance broker. They specialise in matching businesses with suitable lenders and can often find options that traditional banks might overlook.

Crowdfunding: Crowdfunding involves raising small amounts of money from a large number of people. Platforms like Kickstarter and Crowdfunder have made it easier than ever to connect with potential investors. While rewards-based crowdfunding is popular, it’s essential to consider equity crowdfunding if you’re seeking long-term investment.

Investors: Investors provide capital in exchange for ownership or a share of your profits. This can range from friends and family to angel investors and venture capitalists. Each type of investor has different expectations and investment criteria.

Credit Cards: Short-term financial needs can sometimes be covered by credit cards. Look for cards with low-interest rates or introductory 0% periods. However, credit cards are generally not suitable for long-term funding due to high interest rates.

Friends and Family: Borrowing from friends or family can be a viable option, especially in the early stages. While interest rates may be lower than traditional loans, it’s essential to have clear repayment terms to avoid straining personal relationships.

Personalised advice

The directors at RDG Accounting have experience in all the above types of finance so if you would like some help then give Russell a call or book a meeting here.

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