What is New Business Finance?

16th May 2018

Deciding to be your own boss can be an exciting undertaking. There’s nothing more rewarding than seeing an idea turn into a successful business venture in an industry you know and love. However, only 20% of new businesses make past their 1st year with only 50% of these continuing into their 5th. That is why obtaining the right financial support is so paramount. But during the early stages of your business’ development, you may only possess a limited trading history making it much harder to convince lenders. Although this generally cuts you off from more conventional forms of finance, applying for New Business Finance could provide a viable alternative. If your business hasn’t yet matured past its second 2nd year, New Business Finance can help your business obtain the funds it needs through either Crowdfunding, Peer-to-Peer Lending and Grants.

  • Crowd Funding
  • Peer-to-Peer
  • Grants

How does Crowdfunding work?

Crowdfunding works by appealing to potential investors via an online platform. Here you can promote your products and services and the competency of your team to gain their confidence. This can be achieved by video demonstrations, articles, commenting on forums, conducting live online discussions or using any other promotional resources that you may have at your disposal. Because the money you could receive is based upon the faith that potential investors hold in your business, there’s isn’t an upper limit as to what you could obtain. At the same time, you need to be aware that the funds you could obtain may fall below or above your initial funding request. In exchange, investors will each receive a share in your business, the size of which depends on how much you’re willing to hand over and the size of their investment.

Starting up a new business? Cut off from conventional forms of business finance? Need help raising capital? Apply for a New Business Loan today, or learn more about how your business could benefit from New Business Finance!

How does Peer-to-Peer lending help?

Peer-to-Peer lending also operates by you appealing to investors via an online platform, expressing the minimum amount of funding that you require. By releasing video demonstrations, articles, engaging with forum users and participating in online discussions, you’ll need to convince lenders of the viability of your business, products and services. Therefore, the more confidence you inspire in investors, the more money you could receive. However, what makes Peer-to-Peer Lending different to Crowdfunding is that you don’t keep the cash. Instead, you’ll make Fixed Monthly repayments back to your investors via the platform, plus interest. Taking into account how much you’ve received, the length of the term and the rate of interest, the platform calculates the size of these monthly repayments.

How do Grants work?

Grants allow businesses to gain external funding through either institutional or government-backed schemes. The most appealing feature of a grant is that you’re not required to pay it back, but that also causes this form of funding to be highly sought after. In order to qualify, it’s important that you thoroughly read the brief for every scheme you apply for since they can vary dramatically. Also, the way that you’re able to use these funds is limited to a specific purpose. For example, if applying for the government-backed ‘Plug-in car-van grant scheme’ you’re only allowed to use the funds for purchasing a single, low emission vehicle that is new and not secondhand. In addition, depending on the category and worth of the vehicle, the grant may cover the entire or just a portion of the purchase cost. So you need to be clear about how the scheme you’re considering operates before entering an application.

Growing a new business?

As exciting and rewarding as becoming your own boss can be, it doesn’t come without its challenges. At such an early stage, funding is, without a doubt, one of the most common issues you’ll have to contend with. In order to advance your goals, your business needs access to key funds in order to reach the next stage in its development. And as your business grows and matures into its second trading year, you’ll be surprised by what business finance solutions lie in wait. So if you’re running an emerging business and are wondering how you can acquire additional funds, apply for a New Business Loan today, or learn more about New Business Finance with Rangewell.


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David Harrison

David Harrison

Content writer
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