How to get business funding

Running a business requires money, and whether you’re an established small business or a brand-new start-up, you could always do with more of it. Many business owners and entrepreneurs don’t realise they’re eligible for financial support. And many others feel unable to take time out of running the day-to-day to research and apply for business loans or grants. However, in some cases, registering your business for funding can take a matter of minutes. Grants are usually available for a limited amount of time, so it’s worth checking closing dates when you’re researching, and staying up-to-date on what’s available so you don’t miss the boat.

Grants and loans can provide vital funding to get start-ups off the ground. And there are lots of finance opportunities to help already established small businesses to grow. The options are many and varied. Here’s our guide on how to find business funding in the UK.

Investors for small businesses

Capital investment can come from either individual angel investors or venture capital funds (a group of individuals or companies looking to invest). They provide funding upfront to support the next stage in the business’ growth in exchange for an equity stake in the company. They will also expect to get a return on their capital from the business’ profits. Often considered the cheapest form of capital, it usually doesn't have to be paid back according to a fixed schedule, or sometimes at all. Depending on the investor you may also get access to their skills, knowledge and contacts within the sector which can prove incredibly valuable.

How do I find investors? 

You may know someone who's prepared to invest or you could ask to be introduced to a potential business angel by your financial advisors or other business contacts. You can also find dedicated events where you can meet potential investors. While it’s not always like Dragon’s Den, to win over an investor, you need to know your numbers and have a carefully prepared pitch.

Small business grants

Grants are an excellent way to help fund your expanding or developing business. While they come with terms and conditions, unlike business loans, grants are one form of funding you don’t need to pay back. Some require match-funding and some come with caveats on the outcome of the project. It’s essential you take time to read through the conditions before you apply for any business grant.

National grants 

Grants available nationally include the Seed Enterprise Investment Scheme (SEIS) which helps your company raise money when it’s starting to trade by offering tax relief to investors who buy shares in it.

You can apply for Innovation Funding from the government if your business is researching or developing a new process, product or service.

The Arts Council National Lottery Project Grants provide support to organisations with a focus on the creative and cultural sector. And if you’re a business looking to expand overseas, you can apply for funding to help with the costs of attending or exhibiting global tradeshows through the UK Tradeshow Programme.

Small business grants in the South West 

The South West Enterprise Fund (SWEF) supports businesses that have been trading for less than 2 years. You need to be aged between 18-30 and live in the South West.

The Rural England Prosperity Fund has been created to boost the rural economy as part of the government’s levelling-up programme. £110m has been made available to local authorities to be invested in rural communities. Projects that create job opportunities, improve community or digital infrastructure, and maintain or create new cultural or heritage sites can apply for a share of the funding. The parameters of the scheme are broad, creating plenty of opportunity for organisations and communities to be given an extra boost where it is needed most. Find more information on the Rural England Prosperity Fund and how to apply here.

If you’re looking for a small business grant in Devon, the Devon County Council website has lots of useful information. The Somerset Chambers of Commerce features links to the various local authorities offering grant funding. If you’re in Cornwall or the Isles of Scilly, the Cornwall Council website features a long list of funding bodies. Dorset’s Local Enterprise Partnership provides lots of information on funding for the county’s small businesses. You can also find more information on local grants on the South West Growth Hub’s website.

Business loans from your bank

A bank loan can be an affordable way of borrowing funds for your business. You can spread the payments over a period of time and at a monthly cost that works for your budget. If you already have a business bank account, it’s worth approaching them in the first instance because you already have a history with them which can work in your favour.

If your existing bank is unable to help, several online banks may be able to. Moneysupermarket has a helpful guide on medium to long-term business loans.

Start-up loans

Just starting out? If traditional bank finance isn’t an option for you – either because there’s a lack of credit history or a lower credit rating – it’s worth considering a government-backed start-up loan. The British Business Bank lends up to £25,000 and offers 12 months of free business mentoring and a range of free courses for people who are going into business for the first time. You need to be either starting your business or have been trading for under 36 months.

Peer-to-peer lending

An increasingly popular method of funding for small businesses is peer-to-peer lending. Borrowers can get funding without going down the traditional bank or building society route. Instead, a peer-to-peer website matches you with a suitable investor and manages all aspects of the transaction. Usually, the loans are secured and interest rates are fixed. Folk 2 Folk are a peer-to-peer lender based in Cornwall and a great place to start if you want to find out more about this type of small business funding.

Crowd-funding

We’ve all heard about crowdfunding success stories in the news in recent years, but how easy is it? If you’re a business with a new product or idea to launch, crowdfunding can be a great way of raising finance – especially if it has an interesting, or inspiring story behind it. The more newsworthy your new product or service is, the more it’s likely to raise. And you may also raise the profile of your business. As a result, crowdfunding requires a certain amount of marketing and PR management.

How does crowd-funding work?

You can set up a web page yourself or you can register with an organisation like Crowdfunder – the UK’s largest crowdfunding site – and they’ll create a web page for you. People can then visit your page and pledge funds to support your new venture.

It works well for established businesses that already have a loyal following and want to diversify with a new product or service that their audience has been asking for. In exchange for funding, business owners might offer exclusive first access or a discount on their new product when it launches, or an invitation to a special event such as a launch party or a workshop. Crowdfunding also works well for start-ups. The important thing is, you have to promote it. That’s where marketing and PR come into it.

In need of more advice? We’re here to help.

Here at BIP, our business advisors have up-to-date knowledge of recently introduced funding schemes, both nationally and specific to the South West. If you’re planning on applying for business funding, it can really help to have someone experienced on hand to support you. We know what funding providers are looking for in a successful application and can help guide you through the process.

We regularly run funded programmes offering guidance on a broad range of topics including business finance, planning, marketing and more. Please take a look at our Business Support page to see the current assistance available. If we can’t provide help as part of a funded package, we also work with clients at an affordable hourly rate. Please get in touch for more details.

To stay up-to-date on all of our programmes and funding opportunities in your area, sign up to our enewsletter here.