Often when looking at starting a business or growing an existing business, it can be hard to understand of the business funding solutions available to you. They range from investment and grants, to start-up business loans and other business finance.
It’s important to understand the positives and negatives of each solution before making a decision, to make sure that you don’t get caught in the dark. This can be especially hard with the false information that can be shared around, so hopefully this will clear up any questions you may have.
Outside Business Investment
Outside business investment can be a solid choice for funding your business, but isn’t for everyone.
Positives
- Often the investor(s) will be happy to mentor you
- You have additional individuals focussed on your business growth
- Usually you don’t have to “pay back” the investment in a traditional sense
Negatives
- You give away equity, leaving you owning less of your business
- It can be easy to get distracted from your main goal of growing
- Potentially high stress of investors demanding to see growth
- It can take months to find an investor that’s interested
Business Grants
The nature of grants make them a naturally attractive option, but should be handled with caution if used as a main source of funding.
Positives
- Occasionally access to a mentor is included with the grant
- Often provide effectively free funding with no need to repay
- There are many specialist grant schemes, such as grants for women in business
Negatives
- It can take months or even years to find out if you’ve been accepted
- You can rarely choose the amount of funding you require
- No guarantee that you will ever be accepted
Business Loans
Business finance can provide quick and cheap funding, but do leave you to grow your business alone.
Positives
- Retain full ownership of your business
- Flexible repayment terms and low rates
- You could have the funding in your account within 24 hours
Negatives
- A mentor isn’t included, so you are left to grow your business independently
- Despite flexible repayment terms and low rates, you do have to repay your loan
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