There is no getting away from it, if you want to start up or develop a business you need some money. Of course you reduce the risks by starting out as small and building up from there, but if you need to purchase equipment, employ staff or need to invest to allow growth, your costs will be high.
The traditional route is to ask for a loan from the bank. This may already be a scary prospect and, given the current fluctuations in the UK market, it’s not a great time to be asking a bank for help. Don’t let that put you off though – the UK needs business innovation and entrepreneurs now more than ever. If the bank says no, don’t despair, there are other ways to seek funding.
To keep it easy to digest we’ll stick to one suggestion per article, this one will focus on the newly announced Bank Referral Scheme, but do bear in mind there are many different options open to you …
Bank Referral Scheme – what is it?
As of 1st November, banks in the UK are now legally required to help you with finding alternative funding under the bank referral scheme. At the time of writing there are 3 approved platforms for banks to refer entrepreneurs to. The aim is to help you find the right amount of funding (you may not need a vast sum and can therefore keep any risk or financial charges lower by seeking less funding) and to place yourself in a market where lenders may actually compete to find your business (resulting in a better offer for you).
Opinion is mixed on the rewards vs risks of this new approach so, as with any investment or financial strategy, make sure you fully understand the risks that apply to your business and seek independent financial advice if you aren’t sure.
For more information on the bank referral scheme see this overview from smallbusiness.co.uk and a more personal view from a small business owner who struggled to get funding from the bank, written by the Guardian.
Other articles in our alternative finance series: