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4 Ways To Obtain Business Funding

Being denied funding for your business can be a real kick in the teeth. Finding the funds to put your plans into action and get your business up and running or moving in the right direction can be instrumental in your success.

However, applying for business finances isn’t as easy as applying for a personal loan, and lenders will have stricter criteria that businesses need to meet to obtain the funding they require.

If you have been turned down for funding, the best thing to do is to look at the reason why. Go through your history and pinpoint any issues that might adversely affect your ability to get credit. Make sure all of your financial documents and accounts are up to date, and identify any discrepancies that will be working against you.

Then, you can look into the different types of funding available for businesses to hope you get the finances you need to keep moving forward.

Machine Finance

Machine Finance is a particular type of finance that allows you to lend money to facilitate the purchase of new equipment or machinery integral to supporting your business and what you do. The upfront cost of these purchases can be massive and put business finances under extreme pressure, but finance options specifically for this objective can be instrumental in getting the equipment you need to stay up and running. You can get machine funding in different options, including hire purchase, leasing, and refinancing.

Peer to Peer Lending

On the face of it, peer-to-peer lending (P2P) seems like getting a typical bank loan. However, this difference is in where the money comes from. For borrowers, there is little difference between P2P lending and bank loans for businesses. The money comes from individuals who invest their money in P2P lending schemes, and the lender allocates the funding to the successful applicants.

Business Grants

Business grants can be an excellent way to fund your business, but these days, free grants that do not need to be paid back are few and far between. Enterprises must meet strict criteria (i.e., meeting an urgent demand, solving a problem, or facilitating social mobility). Grants are available from the government, the EU, your local authority, or a local enterprise partnership. Typically, these grants are reserved for the following sectors;

  • Research and Development
  • Environmental Schemes
  • Opportunities for Young People
  • Employment and Training

Equity Investment

Equity investment is when you get investment from venture capitalists or angel investors for a share of your company. Those who watch Dragons Den will be familiar with this concept. 

This type of funding is highly competitive, and to be in with a shot, you will need to demonstrate that your business has the potential to grow in the next few years and investors can see a return on their investment. The exact terms will be something negotiated by the investor, and they will be able to offer you an immediate cash injection and help and advice to grow your business. But it is well worth doing if the opportunity presents itself and you are happy with the terms.

There is more than one way to fund a business, regardless of whether it is a new startup or an established business looking to grow more. Assessing your options carefully and seeing what you have available to you can help you to put a plan in motion to make your business more attractive to investors and help you secure the funding you need when you need it.

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