03: Finance and grants
Your business plan should tell you how much finance you will need. There are several possible sources of finance, with a variety of pros and cons. The main ones are:- Your own savings.
- Loans from friends and family.
- A bank overdraft.
- Bank business loans.
- Specialist loans, such as loans from the Prince’s Trust for young people.
- Commercial mortgages – useful if you are buying property.
- Grants from government, the European Union, Regional Development Agencies, local authorities and other sources.
The Small Firms Loan Guarantee Scheme guarantees loans from the banks and other financial institutions for small firms that have viable business proposals but who have tried and failed to get a conventional loan because of lack of security. If your business will be set up as a limited company, you might find individuals prepared to invest by buying your shares. Investors could be friends and family, or business angels. These are individuals who invest in small to medium size businesses with high growth prospects. They may be attracted by tax relief under the enterprise investment scheme (EIS).
