How to get funding for your small business

How to get funding for your small business | Easy As VAT | UK financial coach for female business owners

This post is sponsored by Boost Capital.

I had a little chat over on my Instagram Story a while ago about funding for small businesses (it's saved as a highlight) because it's something lots of new business owners dismiss as something that they aren't eligible for or they feel embarrassed asking for help. Business funding is a topic I've wanted to go into more depth on for a long time, so when Boost Capital got in touch to see if I was interested in working together, I knew that now was the time!

Boost Capital offer flexible small business loans with a super quick and simple application process and flexible repayments. It's an alternative to traditional bank loans which can have pretty rigid repayment terms and usually have a long and complicated application. You guys know that I'm all about making the financial side of your business easier, so I'm excited to collaborate with a company who shares this goal.

Here are the options available for funding your small business, as well as the pros and cons of each.

Bootstrapping

Bootstrapping means that you fund your business yourself - whether that's by working alongside running your business, using your savings or credit you have available to you (warning: be sensible with credit - it ain't free money). The growth of online businesses has made bootstrapping a more viable way of starting a business, as they often have very low startup costs.

Pros: little/no debt, full control and ownership of your business, low risk

Cons: if your business fails, you lose the money you've invested, you may have to compromise if you don't have enough money

Small business loan

The idea of taking out a loan can be scary, and it's definitely something to consider very carefully before you apply. Work out exactly how much money you need, plan how you're going to use it and how it will grow your business and make sure that you'll definitely be able to pay it back, because defaulting on the repayments can wreak havoc on your credit score, meaning you may have difficulty obtaining credit in future.

Having said that, a small business loan can help to really get your business off the ground or take it to the next level by providing a cash injection, and there are so many options out there, from Boost Capital who I mentioned earlier, to traditional bank loans, and even the Government's Start Up Loans programme. Remember, borrowing isn't bad as long as you're smart about it and your business has a good chance of success - most new entrepreneurs have to get loans to turn their business idea into reality, and getting help is nothing to be ashamed of.

Pros: provides a lump sum of cash, you can pay it back in small instalments, you retain full control and ownership of your business

Cons: the application process can be lengthy, you need good credit, your credit score will be affected if you don't make the repayments, you'll pay interest on top of the actual loan amount

Crowdfunding

Crowdfunding is a relatively new way of raising money, but it can be really effective. Basically, you set a target amount and ask the public to invest in your business, usually through a website like Crowdcube or Kickstarter. You might offer incentives for people to invest certain amounts, like shares in your business or free merchandise. It works well because people can invest as much or as little as they want, meaning low risk for them and high gain for your business venture.

This is a great idea if you or your business already has a large, engaged online audience, as they'll be more likely to contribute, particularly if the project you're funding is of interest to them and they feel involved by investing. A good crowdfunding campaign can also get more publicity for your idea and business, as well as seeing if your idea is actually viable - if lots of people invest, you know your project has a great chance of success.

Pros: low cost, can generate publicity, a good way to see if there's interest

Cons: you may have to offer incentives which could cost you, if you don't make your target amount you usually lose the money that's been invested, people may be critical if they've invested and don't like the end product

Angel investment

We're getting into the serious stuff here! Angel investment is when a wealthy individual (or "angel") provides funding to a business which they believe will be successful, usually in exchange for a percentage of ownership in the company and your profits.

Your angel will not only provide the funds to get your business off the ground, but will also take an interest in helping to make it a success - remember, this is an investment for them, they want to make money too! - and is most likely an experienced business owner themself, so they'll be able to share lots of valuable advice and wisdom with you.

Pros: investors are often willing to take risks, it isn't a loan so you don't have repayments, most angel investors are experienced in business and can offer advice and contacts to give you a higher chance of success

Cons: you no longer have full control and ownership of your business, you won't receive your full profits as some will go to your investor, investors often have high expectations and you will need to explain your decisions and actions

If you've been thinking about how you can get funding for your business, hopefully this post has given you some ideas of how to do it in a way that suits you! If you've used any of these funding options before, comment below and let us know how well they worked for you!


I'm a financial coach helping female business owners to grow fulfilling, financially sustainable businesses. If you're ready to build a business that allows you to focus on your passions and work on your own terms, click the button below to find out how I can help you.

I also create courses and resources to help female entrepreneurs to manage their business finances.