Own funds, borrowings, venture capital and government or private grants are the main small business finance options in UK (and elsewhere). Each of these sources is appropriate in different circumstances.
This page comes under the section Industry in UK.
You need finance for your small business:
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Different kinds of financing are appropriate for the above needs. Generally speaking, long-term loans are needed for long term assets such as machinery. Lines of credit are best for financing revolving items like materials which generate sales receivables and then cash. Your own funds are needed to provide margins that would be insisted upon by lenders, and cushions to absorb cash shortages caused by emergencies.
A separate article on Small Business Funding discusses the general financing issues in more detail. Let us now look at the special small business financing options in UK.
Small Firms Loan Guarantee is a scheme under which "viable" business projects, supported by detailed and realistic business plans, are able to secure loans even if the promoters have no collateral to offer. Government guarantees up to 75% of the loans, which are made by approved lenders. You can contact the nearest BusinessLink center for full details.
Grants and Subsidies are available in specific cases, such as for research, distressed area development, training programs and such special purposes. We discuss UK Government Small Business Grants in a separate article.
Venture Capital: British Venture Capital Association is the industry body of private equity and venture capitalists. Venture capitalists take up shares in business ventures that promise quick and high returns. You can approach BVCA members for funding and professional advice.
Leasing Companies buy the equipment you need and lease it to you. This can be a good option for small businesses to reduce set up costs. The Finance & Leasing Association is a good source of information on this option.
Invoice Factoring is a liquidity option for businesses that are already operational and desire to get immediate cash against their credit invoices. Factors will discount your credit customer invoices paying you the invoice amount after deducting their discount charges. You can find invoice factors at Asset Based Finance Association website.
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Written by Dermot Berkery, an internationally known venture capitalist with Delta Partners, this complete toolbook thoroughly details how venture capitalists arrange the financing for a company; what they look for in a business plan; how they value a business; and how they structure the terms of an agreement. Within its pages, you'll find everything you need to successfully raise new business capital with the most attractive terms possible.
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