For some entrepreneurs, securing startup funding, business loans or grant is a constant challenge.

There are various sources of finance available for new startups and businesses. Below are  options that may be considered:

New Enterprise Allowance (NEA)

You could get mentoring and an allowance to help you start your own business through New Enterprise Allowance.

You may be eligible if you’re over 18 and either:

You or your partner get Universal Credit, Jobseeker’s Allowance or Employment and Support Allowance
you get Income Support and you’re a lone parent, sick or disabled

Once you’ve made a business plan that your mentor has approved, you:

May get a weekly allowance worth up to £1,274 over 26 weeks
can apply for a loan to help with start-up costs

The NEA is an initiative funded by the Department for Work and Pensions (DWP) that helps
unemployed people to start up their own business in England, Scotland and Wales.

For more information, visit https://www.gov.uk/

Family loans

Friends and family who are supportive of the business idea may be prepared to help by offering a loan, particularly if it has not proved possible to get one from a bank either directly to the entrepreneur or into the business. This is a quick and cheap form of finance compared to a bank loan and the terms and interest may be more flexible than a bank loan. In some cases, there is the possibility of a free interest loan.

Bank loans

Banks offer a variety of finance options, services and introductory offers to startups and small businesses. Many businesses use bank loans as a suitable part of their financial structure. A bank loan is an amount of money borrowed for a set period within an agreed repayment schedule. The repayment amount will depend on the size and duration of the loan and the rate of interest. There are factors to consider, for example, the amount to be borrowed, the rate of interest charged and the repayment period that is affordable. For a business start-up, it is likely that the loan will need to be secured against a personal asset. However, some banks give unsecured loans to a certain amount.

For more information visit https://www.money.co.uk

Crowdfunding

Start-ups and small businesses can raise money by taking advantage of the internet to spread awareness of their project and to solicit for funds. This way, people can reach more potential donors than traditional forms of fundraising.
Crowdfunding is about persuading a large number of people on the internet for relatively small amounts of money — $10, $50, $100, maybe more. Usually, those seeking funds will set up a profile about their business, project or venture on a crowdfunding website – which is sometimes referred to as a crowdfunding platform

Self Funding

• Savings

Personal savings are the most common forms of finance for startups and small businesses. Investing personal cash is a cheap form of finance and it is a strong signal of commitment to potential investors and banks. You will not be getting into debt and it keeps you focused on growing your business

• Credit Cards

For some start-ups, its the only option to start a business.

You get unsecured money without having to worry about collateral and most credit cards do not charge interest the first few months. You get the money you need to fund immediate growth. However, if misused and unable to pay back, it will negatively affect your credit score.

• Overdraft

Personal savings are the most common forms of finance for startups and small businesses. Investing personal cash is a cheap form of finance and it is a strong signal of commitment to potential investors and banks.

Start-up loans

A Start-Up Loan is a government-backed personal loan available to people aged 18 and over looking to start or grow a business or for businesses that have been trading for less than 24 months in the UK. You can apply for startup funding between £500 to £25,000 to start or grow your business. The startup loan is unsecured and comes with other benefits such as free application support and no setup fees. Start-Up Loans are government-backed and charge a fixed interest rate of 6% per year.

You can repay the loan over a period of 1 to 5 years. There’s no application fee and no early repayment fee.

To be eligible for a Start-Up Loan, you must:

Be aged 18 or over
Reside in the United Kingdom
Have a business which is not yet trading or is less than 2 years old

Venture capital

Venture capital is a means of financing a business where a business receives unsecured funding in exchange for a share of its equity. Investors will view an entrepreneur’s idea or company that they think might succeed, they will offer to make a venture capital investment in exchange for a percentage return and in some cases will also want to play a key role in the decision-making process. The needed startup funding is made available at the early-stage of the businesses to help them grow. As well as money, businesses can expect strategic advice from an experienced investor.