Start-up Finance questions

Tired of living someone else’s dream? Eager to monetise your own ideas? Isn’t it time you pursued your own success? If your answer is ‘Yes, yes and oh yes’ then perhaps becoming your own boss is the way forward.

Naturally, starting your own business will, of course, be very exciting but the reality is that it’s also one of the most difficult stages you’ll face. However, if you’re up for the challenge and willing to go that extra mile in order to achieve your vision, one of the key obstacles to overcome is funding. Acquiring access to sufficient amounts of capital is an absolute must, but is often a tricky area to navigate, which is where asking the right questions about start-up finance could help.

Why should I use finance to support a startup?

After registering your start-up, it will take a while before you begin generating a profit on account of your expenses and a limited customer base. But in order to establish solid foundations for growth, expansion and reliable day-to-day operations, you must ensure that you have the ability to invest in every single aspect of your business. Naturally, turning towards your own savings, family or the money you’re earning from existing employment may seem like the obvious solution but supporting your business this way could leave you out of pocket and lead to strained personal relationships, causing more problems than it solves in the long-run. As such, whether you need help acquiring equipment, staying on top of expenses or even running a marketing campaign, applying for Startup Finance instead could be a more suitable course of action to take.

Need help supporting your business’ development? Unsure able about what finance solutions are on offer to you? Apply for Business Finance or learn more about how your business could benefit.

Getting the money to start a business

Starting your own business will always be a labour of love. But if your hard work is to pay off, it’s imperative that you acquire the necessary funds to support the development and maintenance of your business. Naturally, like many other business owners in your position, requesting financial support from one of the UK’s leading financial institutions might be your first choice. But being subject to stricter lending regulations, they may not be able to accommodate your request on account of your limited trading history.

Instead, you could think outside the box and explore what the Alternative Finance industry has to offer. Regardless of size or sector, the Alternative Finance industry is providing more and more business owners with access to the funds they need. You just need to find a solution which is appropriate for your business.

How can I get financial help to start a small business?

Although the Alternative Finance industry is opening the doors to the UK lending landscape, being a start-up will still affect what products you’ll be eligible to qualify for. Yet, nevertheless, there are plenty of funding opportunities available that could alleviate the strain on your business’ finances. This could include finance solutions such as Investment Crowdfunding, Loan-Based Crowdfunding (or Peer-to-Peer Lending) and Merchant Cash Advance (MCA).

• Investment Crowdfunding: involves using an online platform to pitch your business directly to investors in order to receive their backing, which is achieved by creating articles, videos and hosting live discussions. If they think your business has potential, they may decide to invest their own capital in exchange for equity (shares) in your business. As such, because funding is based on how much interest and confidence they have in your’ business’ potential, there’s no limit to how much capital you could raise or what it could be used for.
• Loan-Based Crowdfunding: like Investment Crowdfunding, this also requires you to pitch the merits of your business across an online platform directly to investors. But rather than take up shares in your business, they join a panel which will enable them to pool their capital together to offer you a lump sum that is gradually repaid using a Fixed Monthly Repayment scheme, plus interest. Plus, depending on the platform, you could enter a short-term agreement lasting up to 3 years and, sometimes, this could even be extended to 5 years.
• Merchant Cash Advance: although not classified as a loan, an MCA an unsecured finance agreement that enables you to borrow an advance based upon your predicted future card-based sales. As such, you start-up must be able to accept card-based (credit and debit card) payments and be able to provide, on-demand, your latest sales reports for at least 3 or more consecutive months, giving the lender to means to calculate an average. So, for example, if you’re regularly earning around £20,000 in card-based transactions each month, you could receive an advance for the same amount, if necessary.

Plus, rather than subjecting you to fixed monthly repayments, Merchant Cash Advance instead uses a Flexible Monthly Repayment scheme. This allows lenders to automatically take an agreed percentage from each of your card-based sales until the agreement has been fully repaid.

Need help supporting your business’ development?

If you’re up for the challenge, running your own business could prove very rewarding, providing you’re able to overcome the obstacles standing in your way. As such, you may need to apply for external funding to provide the support you need to establish yourself and grow. Yet as a start-up, exploring the UK lending landscape could leave you feeling lost and confused. But if you’re determined to see your idea into fruition, there are opportunities available and as your business continues to develop, you may be pleasantly surprised by what finance solutions you could be eligible for - you just need to know where to look.

At Rangewell, we’re an Access to Finance specialist who has mapped over 400 lenders to offer you an overview of more than 23,000 business finance products from across the funding landscape. Our services are free to use and we’ll also support and guide you through the application process. So if you’re looking to raise capital to support your business’ development, apply for Business Finance today or find out more with Rangewell.