ENTREPRENEURSHIP / JAN. 20, 2014
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Start-Up Funding: Your Options

I often dream of launching my own start-up. The circumstances I find myself in as a recently qualified professional with little-to-no realistic industry opportunity usher me towards the fantasy of going at it alone, taking the proverbial bull by those big horns, wrestling it into submission and hopefully making myself a healthy living in the process.

There’s no doubt in my mind that many others out there share this aspiration, and with things (by which I guess I mean economics) eventually on the upturn here in Britannia, who knows, maybe our pipe-dreams will be allowed to flower into a reality sooner than we initially prophesised. However, regardless of how solid your concept may be, there will usually always be one thing standing right in the way: money.

With this in mind, I intend to outline three primary methods of finance used by budding entrepreneurs in this day and age. I do this purely in the hope that you may take a step closer towards achieving the seemingly unachievable.

Grants and Loans

Our government operates its own Start Up Loans scheme. Originally aimed at young entrepreneurs with a unique idea, the scheme is now open to individuals of all ages. Issuing amounts of up to £25,000, repayments are taken over terms of up to five years at the interest rate of 6% per year.

Believe it or not, our government operates another such scheme. Entitled the Enterprise Allowance scheme, it offers cash incentives to die-hard fans of star-trek seeking to start their own business. That was a joke, and a bad one at that. In actuality, they provide funding and mentoring to individuals receiving Jobseekers Allowance, or single parents on income support.

Grants can be a little trickier to track down. Generally speaking, organisations offering non-repayable incentives for entrepreneurs are localised and/or affiliated to businesses or institutions serving the particular region in which they are based. An example of this is the Digital City Fellowship, a Middlesbrough (Teesside University) based group who issue financial support and mentoring to north-east based graduates (like me!).

Bank Funding

A more classical route of sourcing the cash needed to launch a start-up, applying for a bank loan isn’t as daunting a process as most would assume. In fact, most main high-street branches emphasise their yearning to go into business with smart, ambitious entrepreneurial types.

Downsides to lending with a bank include often merciless interest rates and the need to create an absolutely impenetrable business plan before being accepted, though upsides stretch from personalised advice to planned or unplanned overdraft structures- which can be extremely handy during the first few phases of business. As all banks are keen to get on-board with the next successful self-starter, you’ll find that you have the ability to shop around and find the package that’s right for you, should your idea be genius, that is.

Crowd-Funding

Bypassing all conventional methods of attaining business capital, crowd-funding is a relatively new, internet-led phenomenon which allows many investors to stake small amounts of cash in a start-up, as opposed to minimal investors staking vast sums of money. Since catching on, the concept has been used on projects as disparate as unsigned bands and artists seeking money in order to tour and record- to disaster relief.

Today there are many operational crowd funding sites suiting all manner of individuals hoping to fund their respective projects in this very 21 century, and relatively economical way. So many in fact, that I may just focus my next post on showcasing some of them.

There we are then, three very different methods for finding investment in that start-up of yours. For more information on some of the groups discussed, refer to the links below:

http://www.startuploans.co.uk/

https://www.gov.uk/new-enterprise-allowance

http://www.digitalcityfellowships.org/

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