The pandemic was difficult for all businesses, big and small, so it’s understandable that entrepreneurs might be struggling to find funding even when things are getting back to normal. If you’re looking to expand your current venture or set up shop for the very first time, then getting the right financial backing is a must. While some people manage to get their start-ups off the ground using their savings, most entrepreneurs simply don’t have the capital needed to begin trading.
Fortunately, despite the widespread financial hardship experienced during COVID-19, there are still plenty of ways that small businesses can secure the funding they desperately need. This blog will go through some of the top ways you can get the extra money you’re looking for to push your business out of the planning stage and get set up.
Regardless of whether you’re a first-time business owner or this is your second or third venture, you’ll be able to make the most of one or more of these financial solutions.
Grants
By far the most attractive option for small businesses, grants are like loans that you don’t have to pay back. Finding information on small business grants is easy, but having your application approved is another matter entirely. As you can imagine, the competition for grants is fierce and the application processes can be long and complicated. It’s important to read any conditions for grants carefully to avoid getting halfway through and realising your small business doesn’t even qualify.
One of the best ways of beginning your search for grants is by looking into what your local council and community centres have to offer. While these grants might not be for large amounts of money, they can be incredibly helpful when paired with loans or savings.
Bank Loans
One of the most widely-used forms of funding for small businesses, loans are available at most major banks as well as smaller online lenders. There are so many different types of loans available that there’s bound to be one that suits your business needs. From short-term and long-term loans to fixed and variable rates, finding the right loan isn’t usually a problem, but your credit rating and ability to make repayments could be.
First-time small business owners may not have an established credit rating, making lenders less likely to offer them money. While some online providers will be more willing to take a risk on a new start-up, you may be required to repay your loan sooner or have to deal with a higher interest rate. Before taking out a loan of any kind, make sure you speak to an accountant or financial advisor, as committing to the wrong kind of repayment plan can cause your business to fail before it has even started.
If your business is currently trading, you might be able to apply for the government’s Recovery Loan Scheme. Perfect for anyone who tried to get up and running just before the pandemic, this loan is designed to finance businesses that have been negatively impacted by COVID-19.
Crowdfunding
Over recent years crowdfunding has shot up in popularity, with many start-ups harnessing the power and goodwill of the general public to get their products and services set up. If you’re unfamiliar with the concept, crowdfunding involves asking potential customers to help you raise money to start your business. There are lots of websites that help you start your campaign, but this form of fundraising is particularly effective for businesses that already have an online following. This is because they already have an audience to tap into to get the ball rolling.
Most businesses that turn to crowdfunding have an innovative product or idea that will really change people’s day-to-day lives. It’s important to start marketing early, convincing your audience that your business is one they don’t want to miss out on.
To encourage people to make donations, many entrepreneurs offer incentives depending on the amount that someone gives. This could include a thank you message, exclusive access to new products, free samples or discount codes. Because your business doesn’t even exist at this stage, giving people an incentive to donate is often the best way to get more money flowing in quickly.
Investors
Finding investors to fund your new venture could be a great way of having access to significant amounts of money as you get set up. Money from investors sits somewhere in between a grant and a loan because while your investor isn’t expecting you to pay their money back, they will want a share of your company in return. For this reason, it’s crucial to have a solid business strategy in place before pitching your idea to investors – you’ll really need to convince them that your idea is worth their money.
But just because an investor makes you an offer doesn’t mean you should jump at it straight away. Sometimes you’ll receive the amount you’re asking for, but the investor will ask for a large share of your future profits. While this might not seem like a big deal at the beginning, further down the line you could be finding it difficult to make money for yourself. You always have the option of finding more than one investor to get the money you need if the one you set your sights on is asking for too much.
Is getting funding post-pandemic possible?
Absolutely. While many of the COVID-19 support schemes are closing due to an end in restrictions, aspiring small business owners still have a lot of options. It could be a little more difficult to secure the funding you need at first, but as the economy recovers, there will be more and more opportunities popping up all the time.
Just remember that securing funding isn’t always easy, so don’t give up if you’ve received a few rejections. Don’t be afraid to reach out to experts and ask them for advice on applications and pitches. Sometimes the key to getting funding is simply presenting your business in the right way.
