Startup Funding: Financing your business without a bank loan

Finance expert Keith Tully, partner at Real Business Rescue, has some advice on how to fund your start-up without a bank loan.

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How do you fund your start-up without a bank loan? The first step when you decide to move a business plan into action is to get funding for your start-up idea. Once you have secured funding, you will then be able to work out how much capital you will have to run your business as, without the desired amount, you will have to cut back on business costs, expenses and plan a strategy to ensure that you earn a profit.

The more traditional route for raising start up funds is to seek a small business bank loan. However, there are other options now available from a range of finance providers.

Specialist start-up loans

The Government offer start up loans to those looking to launch a business or grow an existing business.

The loans are unsecured personal loans which range from £500 to £25,000 with a fixed yearly interest rate of 6 per cent. They offer 1-5 year repayment terms.

In order to qualify, you must be over 18, a UK resident and intend to start a UK based trading business, or have been trading fewer than 24 months. There are a few business types which are not supported, such as property investment, charities or chemical manufacture.

Using the scheme can also make you eligible for free business mentoring for 12 months.

Similar loans from Virgin Startup Investments and independent brokers are also available for those looking to raise funds to start their business.

Angel investment

“Angel” investors are typically high net work individuals who invest personal money or money on behalf of a profitable fund.

Angel investors typically fund entrepreneurs if the start-up is considered having high growth potential and the business idea has gained positive interest from prospective customers.

They will also bring their experience, understanding of the industry and knowledge to the active role of personal mentor to the entrepreneur. The angel investor will typically seek a return from their investment over the long term.


Do you think that your business plan can get a lot of support from a certain community, either local or global? If so then you could try making a public plea for funding through a dedicated crowdfunding platform.

Many crowdfunding websites have helped establish businesses by giving them the opportunity to raise finance where other avenues have failed, and eventually bolstering them into million-pound enterprises.

Crowdfunding is essentially receiving donations from ordinary individuals and interested parties on a global scale to fund your project, prototype or business idea.

Donors are sometimes given an incentive for their financial contribution. If the investment is of significant monetary value, the donor is typically given a stake in the business or partial rights.

Alternative finance

If you are already trading then you might want to consider finance options such as invoice discounting or invoice factoring. These can be used to unlock funds due from your customers.

By receiving payment in advance, you will be able to use the money to reinvest into the business, pay staff wages and bills. Different types of invoice finance options allow you to choose how to manage your relationship with the end client.

Once your start-up has developed into a larger outlet, you may qualify for corporate finance and find tools such as mergers and acquisitions useful to enter new sectors and attract additional business partners, creating a stronger appeal to investors and business partners.

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