How do I go about financing my business?

Information about different options for financial support for your business.

Find out about the grant and loan opportunities that the CPCA offer regional businesses here.

Planning & Advice

Whether you're just starting up or looking to expand your business, planning is key to maximising your financial support.  

  • Find out why a business plan is critical to your success here 
  • Read Startup Donut's 'Essential Guide to Writing a Business Plan' here
  • Watch Young Entrepreneurs' video guide to writing a one-page business plan here
  • Find out about budgeting for a new business here.

If you would like support or help, get in touch with our friendly advisors: we can schedule a meeting or call to discuss your options and provide free unbiased advice to help you succeed and grow. 

A good place to start is by estimating the amount it will take to run your business for the year. This will help you assess your borrowing requirements.

During this finance and funding assessment, you should take into account:

  • How much funding you will need
  • Your financial forecast
  • Whether you can utilise personal assets

    Once you know how much financial support you’re going to need, you can begin to explore the options. 

    Funding Routes

    Once you have assessed these aspects, there are several key funding routes available. Many businesses choose to take advantage of grants and loans. 

    For small business start-ups, grants can be an important part of the funding mix, and they’re relatively easy to come by if you know where to look. There are a number of organisations willing to help you understand which opportunities are best suited to your development plans, which can be found here.

    Alternatively, crowd-funding, angel investment, and invoice factoring are excellent developmental steps and reliable financial support methods.

    Whichever route you choose to support your business, we’ve put together a simple guide to help you navigate the multitude of planning and advice available.

     

    Loans

    Find out more about bank loans and government loan opportunities here. 

     

    Grants

    Finding and securing grant funding needn’t be a daunting process. There are plenty of options available both nationally and locally, and the publicly funded schemes are all about encouraging growth, creating jobs, and cultivating wealth.

    You’ll be glad to know that most businesses are eligible for grants at some stage in their development, usually at the very beginning of their journey. 

    Put simply, grants are a sum of money given by a government or organisation for a particular purpose. Businesses can apply for grants from the government, the European Union, local councils, and charities. It’s important to remember that grants usually require the business to ‘match fund’ them, which means putting up around 50 to 70 per cent of the project cost with the remainder being provider by the grant.

    There are several types of government business grants available, and the most suitable type is a direct grant. This is a cash award given to support vital business activities such as training, purchasing new equipment or machinery, and development and investment. The Mayoral Combined Authority offers a range of grants and loans, which you can read more about here.

    If none of these are quite right for you, there are over 300 direct grant agencies that offer grants between £5,000 and £500,000, including grants for startup businesses. You can find information about some of the most exciting funding and grants opportunities available at the moment in our Business Support Directory. 

     

    Alternative sources of investment

    There are several ways to fund your business that don’t require a loan or grant, including:

    • pledging your personal sources of finance to support the start-up
    • securing buy-in from key investors known as ‘business angels’
    • crowd-funding

    Key Investors ('Business Angels')

    Most start-ups won’t be of interest to investors like ‘business angels’ (such as Cambridge Angels); these are venture capitalists and private equity firms that invest in businesses looking for a higher rate of return on investment and an exit plan.  However, if you’ve had interested parties approach you, take advantage of the investment opportunity by presenting them with your business plan.

    Crowd-Funding

    On the other hand, crowd-funding is an excellent way to grow a small business. Individual investors collectively invest in a business, each pledging a certain amount in return for a stake in the company, return on investment, or other benefits – like discounts. Currently, there are several crowd-funding platforms available for like-minded investors to support international businesses and creative projects: you can find out more about crowd-funding here.

    Another fast-growing option known as ‘factoring’ is becoming increasingly popular with SMEs. Since the restriction of bank financing and the credit crunch, this practice has become a major source of working capital. It provides cash flow for businesses by releasing value tied up in outstanding customer invoices, allowing them to manager sales ledgers and credit control processes. To take advantage of this option, businesses will need an annual turnover of at least £50,000. If your business has an annual turnover of more than £250,000, confidential invoice discounting may be a better option.