Small business funding is on the rise, with funding consistently increasing year-on-year around the world. Small business borrowing in the United States amounted to $1 trillion in 2013, and the United Kingdom is set to benefit from an extra £2 billion in growth capital for small businesses. In addition, Lloyds, one of Britain’s largest banking groups, have pledged to lend an extra £1 billion to small and medium-sized businesses in an attempt to boost lending in this sector. Many small business owners understand the need for finance, but aren’t sure what’s available to them or if they are eligible.
Why Business Funding is Important
Funding is a huge concern for small businesses because although many banks and traditional lenders have eased their lending conditions, the regulation still means that businesses struggle to secure funding or they may be tied down to difficult conditions. All businesses need funding to start and grow, which is especially true for small businesses and startups. A substantial initial investment is necessary for the business to make a mark on their sector, and this financial cushion is invaluable in the case of delayed payments or issues with suppliers.
What Sources of Finance are Available?
The majority of business owners are willing to invest their own money into the business, but there are numerous other finance options available. Bank loans remain one of the most common sources of business funding, with a fairly high approval rate for applicants, but they might not be suitable for your business. It’s important for businesses to find the funding that’s right for them, (follow the link for an interesting guide outlining various types of funding available, weighing up the pros and cons for each source). Some sources of funding, such as crowdfunding and angel investors, may not immediately spring to mind when you are considering your options. These sources require a certain level of networking and getting your business’ name out there, but they are ideal for tech startups or new products being brought to the market, and are good alternatives to the traditional bank loan.
Although it may seem complicated, there are plenty of small business funding options out there and you don’t need to choose the first offer you receive. Researching every source of funding them is the only way to find out what’s available and what suits your business, so you can make a well-informed decision when the time comes.