How to get funding for your business

There are hundreds of government grants available for small businesses. These could help you get funding for things such as business rates, new premises, staff training, or buying IT equipment. 

One clear benefit of a grant is that you won’t need to pay it back. However, just be aware that if you make an overall profit once grant income is included, it may be subject to tax. 

It’s also worth noting that grant applications can be tricky and take a long time. Each one has its own eligibility criteria, application processes, and stages. So do have a good read of the supporting information before you apply. 

If you have it available, then investing your own money into your business has a range of benefits. For example, you won’t need to complete funding applications or pay interest. You also won’t owe anything to lenders or investors in the future. 

There is the risk of losing your personal savings if your business were to fail.

However, depending on your circumstances, you may not be able to access the level of funding you might receive from a bank or other lender. If you’re a start-up, you may also miss out on mentoring and business support that might be rolled into your funding package. 

Crowdfunding platforms are a popular way to get smaller investments from larger numbers of investors.

First, you’ll need to upload a compelling message to your chosen platform. This can detail why people should invest in your business, and what they may receive in return.

This is a good idea for smaller, consumer-facing businesses that may have a community benefit or local angle. And it works, some businesses have raised millions through crowdfunding.

Angel investors are typically high net worth individuals who provide seed funding to startups. This is usually in exchange for a stake in your business.

Often, angel investors are successful businesspeople. This means they could provide invaluable guidance. However, you’ll need to inspire them with an outstanding pitch and proposition first.

Venture capital is like angel investment but on a bigger scale. You’ll need to convince investors, who often act on behalf of a wider firm, to buy a stake in your business.

Big money is often at play here, usually over £1 million and you may need to go through several competitive pitching rounds. 

If you’re looking for a business loan, there are normally three main options to choose from.

• Start-up loans are tailored towards new businesses. They often don’t require much in the way of credit or trading history. Instead, you’ll probably need to show your lender a business plan and projections. You may look at private lenders or government-backed funds such as the Start Up Loans Scheme.
  
• Traditional loans are better suited to more established businesses or those that can demonstrate profit, revenue, and turnover. Alternatively, you may be able to offer collateral or a personal guarantee as a director of your company. 
• Small business loans are a form of lending that's offered specifically to small to medium size businesses. Funds can be used for different purposes from business expansion to managing cash flow. Royal Bank offer small business loans from £1,000 to £100,000. Learn more about Royal Bank Small Business Loan
• Other lenders may offer alternative lending products with their own terms and conditions.

Learn more about how to borrow money to start your business.

(i) Security and / or guarantee may be required.  Product fees may apply.  Over 18s only.  Subject to status, business use only.

Peer-to-peer (P2P) finance sits somewhere between crowdfunding and a business loan. Your funding comes from everyday people who are looking to get better returns from their savings than with an everyday savings account.

Your investment will be allocated from this pool of money by a P2P lender. It will then be treated as a normal loan that you’ll need to pay back with interest. P2P lenders often operate with low overheads and can offer competitive interest rates.