Startup Funding | The 5 Best Options

24-January-2024
24-January-2024 13:41
in Commercial
by Sam Hodgson
Startup Funding

Startup funding can be a bottleneck hurdle for an already complicated process - starting a new business. 

Turning your lofty dreams of business ownership into a reality needs a combination of determination, perseverance and, most importantly, capital.

Raising the money needed for your new enterprise may seem daunting, but with a wide range of startup funding available, it’s a lot more accessible than you may think.

The first step though, is knowing where to look. Here’s a quick guide to startup funding and 5 of the best options to consider.

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Contents

1. Business Loans - The Core of Startup Funding

2. Ongoing Lines of Credit - Startup Funding that Stays With You

3. Asset Finance - Startup Funding for Equipment and Vehicles

4. Grants - Free Startup Funding for Niche Businesses

5. Venture Capital - Third-Party Investment as Startup Funding

Startup Funding Case Studies

Obtaining Startup Funding with Clifton Private Finance

Number 1

1. Business Loans - The Core of Startup Funding

First up, before you go looking in the more obscure places, there is one avenue that’s open to everyone - borrow the money.

Business loans are the core of startup funding. They come under many terms, with offerings such as startup loans, corporate loans, unsecured business finance, enterprise funding, and many others, but they all share the same central idea - someone lends you money to get started and you pay it back (with interest) over time.

There is a huge spread of institutions set up to lend money to someone starting a business.

It’s good business for them, as not only will they make their profit on the loan they provide, but the lender who gets in early with a business tends to generate a considerable amount of customer loyalty, which means you’ll turn to them again and again as your business grows and becomes more and more successful.

In short - lenders want your business, and you want their money. It’s a win-win situation.

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Startup Funding With the Bank You Trust

For many people, the first place they turn is their bank - the one they have been doing their day-to-day personal banking with for years.

Is this a bad idea? Not entirely.

While there is little chance that your bank will offer you the best rates on the market (although they might), the familiarity and trust you have with them does have value.

It can mean that you are more confident and comfortable talking to them, and their immediate understanding of your banking history takes away some of the early getting-to-know-you steps.

That said, in a world of online assessments and quickly-accessed credit history reports, the advantages held by your high-street bank are considerably fewer than they were even just ten years ago.

It is also a somewhat short-sighted approach - that sticking-to-the-familiar idea that doesn’t open you up to the opportunities other startup funding lenders may offer.

A quick search on the internet will immediately present you with dozens of alternative options - not that this un-researched, marketing-heavy list actually presents the most suitable options for your enterprise, but it does show somewhat the scale of offerings.

What then to do?

Start up funding

Bringing in the Professionals - Startup Funding Finance Brokers

Searching through myriad lenders by yourself is confusing and, ultimately, unlikely to reap particular rewards.

There’s no doubt that you’ll be able to find a better alternative to your stalwart bank, at least in terms of interest rate and fees, but it will come with a degree of uncertainly, and potentially the spectre of small print that you have neither the time nor the expertise to properly scrutinise.

Why not call in the experts? Professional business finance brokers, like us at Clifton Private Finance, dedicate their working lives to analysing and understanding the finer nuances of the corporate loan market.

Using a finance broker for your startup funding is going to take the headache of finding a loan away completely, turning potential weeks of gruelling research into free time that you can spend doing what you need to do - namely getting your business off the ground.

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You can also use our business loan calculator below to get an idea of what interest rates, costs and repayments will look like:

Your loan details

How much funding do you require? (£):

Repayment term (months):

Annual interest rate (%):

Your results

Monthly payments:

£

Average monthly interest:

£

Total interest:

£

Total cost of finance:

£
Get a bespoke quote »


Number 2

2. Ongoing Lines of Credit - Startup Funding that Stays With You

Of course, loans aren’t the only form of finance available for startups - far from it. Though a loan with its regular repayments and clear long-term costs is preferable for many, other alternatives can be more flexible and make a better fit for your business proposal.

One of these are ongoing, or revolving, lines of credit. Rather than a lump sum paid into your bank account that you repay over time, a line of credit offers a flexible pool of money that you can dip in and out of as you need, paying interest only on the part you are using.

In the world of personal finance, the most encountered lines of credit are those of credit cards and bank overdrafts.

Both of these work in a similar way, setting an upper limit for the amount you can use them, and then charging interest for the amount you use - plus often a fee for the facility.

However, there’s more. Many businesses looking for startup funding can obtain additional lines of credit - either from the off, or after the first solid few months of business.

Lines of credit do have to be well-managed, especially if you use them to get your business off the ground.

There is a strong temptation to lean on credit cards and overdrafts a little too much, making them an expensive option that heaps interest on month after month.

Used properly, lines of credit provide extra flexibility as part of your startup funding plan, but poorly managed they can spiral into bad debt and ultimately harm your future chances for finance.

Startup Finance

Number 3

3. Asset Finance - Startup Funding for Equipment and Vehicles

The world of asset finance is a continually growing avenue that provides newly formed SMEs with the ability to get their hands on equipment, vehicles, and other essential assets that might otherwise be out of reach.

The essence of asset finance is that the equipment is leased at the start of a contract and then payments are made over time to keep using it.

At the end of the contract term, depending on the type of asset finance used, the equipment is handed back to the leasing company, or a one-off balloon payment is made to transfer ownership of it to your company permanently.

It’s another reason we offer our services as a finance broker to help. At Clifton Private Finance, our asset finance team can filter through the many hire and leasing companies to get you a leasing contract that gives you all the benefits of new equipment for your startup, without costing you in the long term.

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Number 4

4. Grants - Free Startup Funding for Niche Businesses

If you are willing to put in the time, grants offer an amazing opportunity for new startup businesses.

UK government-supported grants for new businesses exist to give you a helping hand, while niche grants from charities or established corporations are regularly offered to help further develop their fields of interest.

Obtaining a grant in many cases is essentially a competition. Grants are limited and it is important to spend time researching the grant criteria and developing a thorough business plan to present your startup in the most advantageous way.

While startup funding in this way is by no means guaranteed, the money is a gift that never has to be repaid and thus represents a significantly positive route to getting that all-important startup capital.


Number 5

5. Venture Capital - Third-Party Investment as Startup Funding

Venture capital (VC) is a way for a fledgling business to raise capital by selling equity in the business to interested external parties.

While investment capital like this does offer a potentially significant amount of startup funding, the loss of complete control of the company and its direction can be off-putting for many entrepreneurs.

Nonetheless, venture capital is a well-respected and hugely effective way of raising funds for a business, with some additional advantages, such as help from business specialists with years of experience, and the potential to join a network of connected businesses.

Like a grant application, obtaining venture capital means creating a watertight business plan to sell your business idea to others.

Startup Funding Case Studies

Read some of our recent business funding case studies below to see how we've helped various businesses in different ways - from growth and expansion to cash flow management. 

Merchant Cash Advance Renewal For Scottish Tailoring Business
Merchant Cash Advance Facility Renewal For Scottish Tailoring Business
Area
Edinburgh
Capital Raised
350K
Business Loan For Expanding Fitness Gym
Fast Business Loan For Expanding Fitness Gym
Area
London
Capital Raised
150K
Business Loan Against London Residential Property for Swiss National
Business Loan Against London Residential Property for Swiss National
Area
London
Capital Raised
£389K
Business Loan Facility To Fund Working Capital For Company Expansion
Business Loan Facility To Fund Working Capital For Company Expansion
Area
London
Capital Raised
£300K
Bridging Loan for Amusement Arcade Lease Extension in Margate
Bridging loan for amusement arcade lease extension in Margate
Area
Margate
Capital Raised
£500K
Short Term Commercial Loan To Purchase Property & Land In Reading For Development
Short Term Commercial Loan To Purchase Property & Land In Reading For Development
Area
Reading
Capital Raised
£1.3M

Obtaining Startup Funding with Clifton Private Finance

Our startup finance team at Clifton Private Finance is made up of industry experts with extensive knowledge of the range of products available for new and fledgling companies in the UK.

Why not speak to us today to see how much you might be able to raise to get your company going in the direction you really want?

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To see what we can do for you, call us on 0203 880 8890.