How to raise $100,000 for your small business

Starting or expanding a business usually means you need some cash for those first time expenses or to get a lease on a shop. So unless you have just won the lottery, here are some ways to generate £100,000 from areas that you may not have thought about.

Use Your Own Savings

Most new businesses are run by their owners either as a one man band sole trader or certainly with just a few employees. With interest rates still at low values perhaps you could remortgage part of your own home. Of course you should take specialist professional advice on this subject because you don't want to increase your mortgage and lose all your cash on a business venture that does't succeed.

Many new business owners do actually inject a proportion of their own savings in any case and if you are applying for a bank loan banks will want to see you take on some of the risk of your new venture to spread the risk of lending from their view point.

Friends and Family

Although our advice is to keep personal and business interest completely seperate perhaps someone you know may be willing to invest into your new idea. If you do decide to go down this route then you should have legal documents drawn up on issues that may evolve over time. You should take professional advice both from accountants and solicitors as sometimes people you thought you knew may take a different point of view if things start to get tough in the years to come.

Loans from Banks

This is normally the first port of call for most new entrepreurs but although banks do lend to many thousands of businesses each year you will still need to prove to them that you will be able to repay any loans or overdrafts they may grant you. One of the things they will want from you is a completed business plan (and you can find some completed business plans online that will get you started to complete this exercise before you approach any banks.

Of course each bank is different and so are the lending rates so it's best to shop around in the first instance to see what is on offer and the interest rates that will be charged.

Grants and Business Angels

There are various government departments that do provide some form of grants although many of these have dried up in recent years. Most of the grants these days are regional so it's best to contact your local council to see if they have anything for new businesses. There are also specialist agencies and organisations like the Prince's Trust that aim at certain sectors (the Prince's Trust is for younger people) that may be able to help depending on your circumstances.

Don't believe there are no grants for you because there are plenty about. Why no start your search on the internet and see what their requirements are.

Leasing and Factoring

There are various leasing and factoring arrangements that may be able to provide improved cash flow for your business. Although these are not cash injections they will in most cases allow you to get cash for any invoices you generate up front or to spread the cost of any assets you require over a longer period of time. There are of course many advantages and disadvantages for factoring so take professional advice before you decide to go down this route.

That is a summary of where you can obtain finance for a business in the UK.

Teneric.co.uk financial advice does not constitute regulated financial advice and this information is provided as general information. You should seek financial advice if you are unsure.