What Options Do You Have Funding For Small Business?

In this day and age, there are many ways that you can fund your small business. You have tax incentives, and you also have traditional bank loans too. If you are not quite sure which approach to take or if you want to make sure that you get the best result out of your venture, then this is the guide for funding for small business.

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Options Funding For Small Business

Family and Friends

It’s very common, especially in the early days of starting a business, for people to ask for the financial support of family. When you go to your family or friends for money, it’s a good idea for you to pitch your idea to them so that they can understand your model and what exactly it is they are investing in. You might also want to talk with them about when they are going to get paid back so that everyone is on the same page.

The great thing about going to your family and friends is that it is a way faster funding process. Of course, depending on the funding that you get, you may be able to discuss interest as well. This could end up being a great investment for them.

There are some cons to borrowing from family or friends though. Mixing your finances with your family or friends could end up damaging the relationship you have if things happen to go wrong. You need to assess the impact of your business failings before you proceed because if you don’t then you may find that you end up doing yourself more harm than good.

Bank Loans

Traditional bank loans are very much a popular source of funding if you want to start your own business. You have to make sure that you do your research when it comes to loans, and you also need to look up the interest rates that are available with every option too.

This option funding for small business is most suited to those who have a very good relationship with their bank, and it can also make for a very convincing business case as well. At the end of the day, some banks will give a very low interest rate depending on your credit score. You won’t have to give up any control over your company to take advantage of this either, so make sure that you keep this in mind. Of course, the downside to taking out a traditional bank loan would be the fact that it can be a long and tiring process. You may also find it to be very time-consuming as well. If you want to pitch your start-up to a bank or an investor, then this startup pitch deck should help.


With this option funding for small business, you can be sure to raise the amount of funding you need from the public. People can choose to lend you money through peer-to-peer lending. You can also give them the chance to take a stake in your business.

This is most suited to businesses that have a lot of growth potential, and it is a great way for you to attract a lot of attention. The main thing that you need to know about this method of raising funding is that it can take a while, and you may have to make a lot of effort when it comes to building your public image. The bigger pool of people you can reach, the more chances you have of getting a great deal.


Angel investors are very wealthy individuals who are able to provide you with funding. They do this in exchange for a small share in your business. Some investors work in groups, but others do the work on their own. Business investors are not suited to those who want to have full and complete control of their business.

The pros of this include the fact that angel investors have a great deal of experience and they should be able to offer you a valuable amount of advice and guidance. Angel investors will ask for a portion of your business though, so make sure that you are willing to give this up if possible.

Venture Capitalists

Venture capitalists are essentially investors who put a huge amount of money, usually far more than an angel investor, into your business. They will do this in exchange for equity. Normally, their objective is to help you grow your company very quickly. They do this so that they can get a really good return on the investment but in a short period of time.

If you are a start-up and you know that you have a lot of potential and you don’t mind giving up some equity, then venture capital funding is a fantastic way for you to make sure that you get everything you need out of your company. Venture capitalists are ideal for those who need some help developing their business and it’s also very easy to open the doors to other contacts in the network too.

The cons of this are that you may have to give up a nice portion of your business. If you are not willing to do this, then having a venture capitalist may not be the right option for you.

Short-Term Loan

Some financing outfits specialize in short-term loans. These are otherwise known as payday loans. This is designed to improve your working capital so that you can boost your cash flow. This method of funding for small business may help you to bridge the gap between your business start-up phase and when you eventually bring in a profit.

This method of funding is actually really quick if you are able to qualify but at the end of the day, you will be paying a very high interest rate. The cost can also add up far quicker than you realize as well.

Of course, short-term loans are not suited to those who do not believe that they are going to be making a profit in the near future or those who are yet to craft a business plan. To take out this kind of funding for small business, you need to be absolutely solid in your approach to your business’s future and the decisions you make, so you can come out making the best choices overall.

Guaranteed Loans

Guaranteed loan schemes, including the Enterprise Finance Guarantee, are really for small businesses that do not qualify for any kind of bank lending. You usually won’t have to prove that you have a good credit history, and you won’t have to worry about much of the requirements, because you will have other requirements to meet instead.

The pros of this include the fact that you have a source of lending if you have tried other more traditional routes but been turned down. You may also have lower repayments if you know that the scheme is subsided.  The cons include the fact that you will need to meet strict conditions in order to qualify and not everyone will.


Incubators are programs that are fully designed to both scale and grow your start-up. The great thing about this kind of business plan is that it can provide you with small seed investment, in return for equity in the business.

The pros include the fact that you will have structured training and you will also have valuable expertise as well. This will help you to grow your business and it will also help you to take things to the next level in terms of your overall investment.

The cons include the fact that the application process can be somewhat grueling, and it can be difficult to make sure that you qualify for all of the requirements that are in place. If you are able to meet the requirements, however, then you should have no problems.

Research Grants

Did you know that there could well be free cash for you to take advantage of? The government are quite often trying to put out great incentives for companies and they are also trying to make sure that they do everything they can to support those who really need it. Even if you do not qualify for any grants, it’s important to know that there are some great tax incentives out there for you to get as well.

The pros are the fact that if you get a grant, it is free money and there are no repayments at all. The cons include the fact that there are conditions that you have to meet, and you need to put in the work to make sure that you are undertaking the correct work to take out the grant.

Tax Schemes

There are tax schemes out there as well for investors. When you take out something like this, investors will subscribe for a share in your business. They will then get tax back and even more income relief if they happen to make a loss.

This is great if you want to try and persuade investors to part with their money so that they can invest in your business. Schemes like this are only available in certain countries though, so make sure that you explore that if you can.

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