Financing your start-up
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Financing your start-up

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No matter what type of business you have, there’s no avoiding that cash is king and finance can be fundamental to success. Whether you’re a start-up business ready to grow, or a new business wanting to scale up your operation, you’ll need to consider the finance opportunities available to you.

Grants

Small business grants are small amounts of funding typically awarded by government departments, corporations, foundations or trusts to existing businesses for the purpose of funding a specific project. Unlike a loan, these grants are non-repayable but will require some level of compliance and reporting to prove you can achieve the goal set out in the grant application.

Generally, small business grants will fund a percentage of a capital project. This is called an intervention rate. For example, a 30% intervention rate means that for every £1 you spend, the business will receive 30p in return.

What Grants are available to Staffordshire Businesses?

Staffordshire Business Innovation Centre offer up to £5,000 to help businesses pay for external assistance to help them research, develop and launch to market a new product or service.

Stoke-on-Trent and Staffordshire Grants for Growth provides gap funding to companies across Staffordshire to cover capital investment that will allow your company to grow in the market place and create new employment.

The Smart Concept Fund offers successful applicants a grant of up to £30k at an intervention rate of up to 60% to help fund an approved product development project, subject to eligibility conditions.

The Keele Research, Development and Innovation Programme offers support worth up to £129,000 to support ambitious Stoke-on-Trent and Staffordshire businesses who want to develop their products or services or to develop new markets.

The Michelin Development Fund offers financial support, as well as business expertise and advice, to small and medium sized enterprises that employ up to 250 people. Applicants in the Stoke-on-Trent area are able to choose financial help, business expertise/advice, or both if required.

Small Business Loans

Small business loans are a form of debt financing used by small businesses and start-ups to secure the financial support they need. Small business loans are seen as a critical source of funding, without which many businesses would cease to exist. Typically, these loans are at fixed interest rates and offer monthly repayments for the duration of the loan period.

Some common uses for small business loans are purchasing equipment, working capital and business expansion.

The British Business Bank is a government-owned business development bank, their ‘Help to Grow’ and ‘Start-Up Loans’ growth programmes are dedicated to making finance markets work better for smaller businesses.

Equity

There’s a lot to be gained from equity investment.

The main focus of MyCleverHub, for example, is to provide an equity based programme for Stoke-on-Trent and Staffordshire based start-ups. For successful applications, you’ll receive an injection of cash or services into your business as well as help from an investor with the experience, expertise and network of contacts to support your growth plans in exchange for the sale of shares. For further information visit www.mycleverhub.com

When businesses are ready to scale their business, there is an equity offering to match your growth ambitions. Angel Investment and Venture Capital typically invest in early stage companies. Expansion Capital supports profitable and growing companies. Private Equity looks to invest in profitable and mature companies, and when your company is ready for a platform offering unlimited equity raises, then an Initial Public Offering (IPO) can be considered.

The primary benefit of equity capital is that the company is not required to repay shareholder investment; instead, the benefit to the investor is the expected return on investment.

When thinking about equity investment you should consider how much of your business you want to sell to an investor. Aim for a balance between retaining control, and incentivising an individual or institutional investor to finance your business.

Crowdfunding

Rather than asking a few people for large sums of money, crowdfunding platforms allow businesses to ask a large number of people for small amounts of money. As well as being relatively inexpensive and time efficient, crowdfunding is a great way for businesses to find out if their big idea has the potential to attract investors and potential consumers. These platforms also offer the benefit of raising the company profile due to the active community which is fuelled by the internet and social media.

Not sure which investment is right for you? The British Business Bank offer a finance tool to evaluate which funding option is best for your business.

Contact Us to hear more about MyCleverHub

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¹ https://www.crowdcube.com/explore/entrepreneur-articles/report-crowdcube-is-uks-biggest-crowdfunding-site-in-2018