What Are The Finance Options For Start-Ups?

The days in which the available financing deals for new businesses were restricted to traditional bank loans are long over, with many different options now available for start-up finance.

Before investigating any of these innovative options, however, it is advisable first to investigate the possibility of a personal injection of funds. This can come either from yourself, or from friends and family. There are obvious advantages to this route, as any loan obtained from personal connections are likely to involve low or even zero interest rates. However, you should be cautious before asking friends and family to invest in your business, as any commercial failure could adversely affect your relationship. Similarly, unless you are extremely confident in the success of your business model, you should not invest all of your savings into your company. Ensure that you can still pay your bills!

Despite the wide variety of new options, there is no reason that you shouldn’t investigate the possibility of a traditional bank loan for your business. You are only likely to be approved if you can show a record of financial success – unlikely for a start up enterprise – or if you can secure the loan against a personal asset or savings. If you do wish to take out a traditional loan, you should at least consider going through a commercial broker, who will be able to compare and contrast all of the packages available from all banks and recommend the best option for you.

If a bank loan is off the table for your business, you may wish to investigate asset financing as an option. This is particularly useful for start-up companies which need significant infrastructure to begin operations. In the most common variety of asset finance, namely the hire-purchase agreement, you gain full use of the asset while paying rental payments each month. At the end of the rental period, you gain full ownership of the asset. Alternatively, if you already own a valuable asset and are looking to release money from it to start your business, you may be able to use it for security on a commercial loan.

If you do not have any assets to use as security, you may still be able to release funds from your existing dealings with customers. This is known as invoice financing, and consists of a finance agency making an upfront payment to your business in return for the rights to collect your outstanding invoices from customers. As you would expect, a significant commission is charged on such transactions, but it does have the advantage of immediately releasing funds. If you need more money than this can provide, then your final option may be to approach one of the many ‘business angel’ networks which are in operation across the country. If your business plan is strong, this can result in a major investment. However, as you might expect, such angels will want a significant return on their money, either in the form of interest or equity!

We can offer you financial solutions to help keep your cashflow healthy. Request a quote now to find out how much invoice finance can save you.


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