There are several sources of finance available depending on the stage of your business and the amount of funds required. In the early stages of a business, borrowing money from friends and family may be the easiest and cheapest option available. Depending on the nature of your business, grants may also be available.

Provided that you do have assets to support a bank’s lending criteria, you may also consider using a bank overdraft for working capital needs or a business loan to finance larger purchases and fixed assets.

If bank funding is not available it may be necessary to consider external equity financing from a business angel. This may seem an expensive source of money as it will cost you a part of your business in the form of equity. However, the experience of an engaged business angel is as important as the financing. Businesses most likely to succeed in raising private equity financing will be high growth scalable businesses with the potential to provide a high rate of return on investment.

Visit SmallBusiness.co.uk government grants guides & tips to help you identify the various government funding schemes and grants available. The key to choosing the most appropriate source of finance is to understand the investor’s perspective associated with each type of finance.

Looking for finance? SmallBusiness.co.uk is working in partnership with trusted lenders to find the best business funding deals. Find out more here.