The right type of funding can transform your business, but how do you know where to start? Sourcing business funding can be one of the trickiest aspects of growing your company, but it’s also one of the most important.
Without adequate business finance, you won’t be able to expand your company and you may even encounter operational difficulties. Due to this, finding the right type of funding is critical to the success of your business in the UK.
At Audeo, we understand how to start a business, why business funding matters and, more importantly, we know how to obtain it. No matter what types of business you run or what industry you operate in, we can help you to find the right source of funding.
Accessing business funding
Companies can obtain funding at any stage in their development, so it’s always a good time to explore your funding options. In fact, you needn’t even be operational in order to qualify for business finance.
With various types of grants and funding available, our team are adept at finding business financing options for start-ups, early developments, expanding firms and profitable companies. Whether you’ve been in business for one year or ten years, sourcing the right business funding will enable you to increase turnover, boost profits and grow your business.
To help you understand the types of funding options available to you, take a look at the types of business finance we specialist in:
Designed to help individuals who want to start a new company or establish a budding enterprise, start-up loans can help to get your business off the ground. When it comes to start-up loans, there are essentially two broad options.
Firstly, you can apply for a standard commercial business loan. Many financial institutions have financing products which are aimed at start-ups and small business owners. Typically, these take the form of a business loan and are available on various terms. As each individual provider can set their own eligibility criteria, you’ll find that there are plenty of different options on the market.
Secondly, you can choose to apply for a government-based start-up loan. Available to new businesses and organisations that have been trading for up to 24 months, start-up loans typically enable you to access funding from £500 up to £25,000, with a fixed rate of 6% A.P.R., and repayment terms of between 1 and 5 years.
Although there are some additional criteria attached to government-backed loans, such as debt repayment being excluded, successful applicants do get access to extra benefits. Most start-up loan providers offering mentoring support, help with business plans and business offers.
To qualify for a start-up loan, you’ll usually need to declare that you’ve been unable to secure funding from other sources. Despite this, start-up loans are a viable and attractive option for tens of thousands of enterprises every year.
R&D Tax Credits
Research and development tax credits are available to businesses of any size and are designed to incentivise innovation. Under the SME R&D Tax Credit scheme and the Research and Development Enterprise Program (RDEC), companies can obtain a tax cut based on their research and development expenditure.
Although the research and development tax credit scheme offers fantastic benefits, it’s eligibility criteria and application process can make the scheme look more complicated than it really is. You’ll need to demonstrate that your R&D activities are ‘qualifying’ under the scheme, for example, as well as proving that your R&D spend was a ‘qualifying expense’ under the terms of the tax credit scheme.
In reality, however, this simply means that your research and development activities can only be taken into account for the purposes of the scheme if they were focused on the development of new processes, products or services or the enhancement of existing ones. In addition, you’ll need to show that the funds you spent on these activities were used for certain expenses, such as the cost of using staff to undertake them.
Companies operating in any sector can qualify for research and development tax credits, so there are no industry-specific eligibility criteria to hold you back. However, the R&D tax credit scheme isn’t well-known, which means most business owners are unaware that they’re eligible to apply. Similarly, many accountants are unfamiliar with the scheme, which means that a significant number of companies are missing out.
Whilst you can only apply for R&D tax credits after you’ve paid for the cost of qualifying activities, a successful application means you will be able to offset some or all of the costs as either cash credits or as a deduction from your corporation tax liability.
Although you can’t obtain R&D tax credits to fund future activities, first-time applicants can claim tax credits for the preceding two years, which means there’s a considerable amount of business funding you could be missing out on.
Angel investors are a great way for businesses to access various types of funding. As angel investors are usually high net worth individuals, they can choose which types of businesses they want to invest in, the level of investment they want to make and specify the terms of the investment they’re offering.
In general, however, angel investment can vary from £10,000 to £500,000 per investment. Depending on the terms of any existing agreements, you may choose to accept business funding from more than one angel investor at a time. However, this can be difficult in terms of management. When multiple angel investors are involved in funding one business, they will often form a syndicate. This can help when it comes to managing the investment and connecting with your investors.
In most cases, angel investors will accept a share of the business equity in return for their investment. Although you’ll need to give up some of your equity, you won’t need to pay the investment back in the same way as a business loan. If the business were to fail, for example, the angel investor would lose the capital they invested but you wouldn’t have a personal liability to repay their funds.
Angel funding is an attractive option for many businesses, but it can be confusing. The wide range of funding options and eligibility criteria means there isn’t a set standard for finding business funding from this source. Whilst angel investment networks attempt to implement some uniformity and clarity for applicants, there are still numerous variables to consider.
When applying for angel funding, it’s important to consider the terms of any potential investment agreements, rather than solely the financing you can obtain. Some angel investors may want to take an active role in the development of the business, for example, whilst others are content with being a more passive participant.
Although eligibility criteria for angel funding vary depending on the individual investor, this type of investment is typically suited to smaller businesses, start-ups, and enterprises who are looking to actively grow their businesses.
Whilst angel funding is an attractive option for business owners, it can be difficult to obtain. As well as trying to appeal to a wide range of investors, you may have varying terms and eligibility criteria to consider.
Designed to provide business funding at the earliest stage of a company’s life, seed funding is ideal for new start-ups and entrepreneurs. Seed capital is typically used to conduct further market research and additional research and development, with the aim of launching a product, process or service.
As seed funding is offered in the initial stages of business development, it’s a high-risk investment but one that offers potentially high returns. As seed funding is a stage of funding, as opposed to a specific type of funding, there are various types of investors who may offer this type of financing.
Angel investors often offer seed capital, for example, as well as investing in more established businesses. Indeed, some individuals enjoy the high-risk nature of seed funding and actively seek out companies who are looking for business financing at the seed stage.
In most instances, seed investors will make an investment in return for a share of the company’s equity. They don’t typically take on any role in terms of business decision-making or the day-to-day running of your firm, although the terms of the investment agreement may stipulate how the funds are used.
Crowdfunding has become an increasingly popular form of seed investment in recent years and many people have used it to acquire business funding. Although crowdfunding platforms can be used to offer an equity stake in your business in exchange for business funding, other options are available too. A start-up company may offer early access or pre-release to initial investors, for example. By rewarding investors in different ways, business owners can retain ownership of their company and still obtain the funding they need.
As crowdfunding doesn’t rely on high net worth individuals to make investments, there are a much higher number of potential investors to target. Indeed, investment options can be set as low as you like, so you could choose to accept investors who make a contribution of just £1 if you choose to.
Another option for securing seed capital is to approach family members and close friends. In fact, it’s estimated that family members and friends make up the largest proportion of seed investors in the UK. Although there can be some drawbacks when it comes to mixing finance and family, asking your nearest and dearest to invest in your company may be a viable option.
It’s unlikely that your family and friends will be approached by other companies looking for investment, so there won’t be any competition to contend with. In addition, these people will know you well and understand your business objectives. Providing formal documentation is drawn up and the terms of the investment are well-established, funding from family and friends can be a great form of seed capital.
Grants and Funding for Specific Sectors
Business grants can be the ultimate form of business funding because you aren’t required to repay them. If you can secure a grant for your business, you’ll simply need to use the funds in accordance with the terms set out in the grant application or documentation.
Of course, the popularity of grants that are awarded means that they aren’t all too easy to come by. Well-known grants and funding options are typically oversubscribed, so there may be a lot of competition when it comes to the application process.
Furthermore, you’ll find that many grants are sector-specific, so you’ll need to check the eligibility criteria carefully. Although there are plenty of grants for new businesses, the vast majority are only available to businesses operating within certain industries. Whilst most industries do have some form of grant scheme available, they aren’t always easy to find.
The internet has made it easier to search for viable grants but, even now, there isn’t a registered office or a centralized database of grants available in the United Kingdom. Due to this, business owners can find it tough to find the right grant opportunities when they’re looking for business finance.
Similarly, some funding options are available to industry-specific organizations too. Whilst these typically involve repayments or equity shares, they are another source of business funding to consider. You may find that a high-profile angel investor with links to the tech industry may want to invest in tech-related businesses, for example. Alternatively, they may choose to use their experience to help businesses from all sectors develop their in-house tech.
By looking for sector-specific or project-specific funding opportunities, you can widen your search criteria and increase the range of funding options that are available to your business. Whilst some grants and funding options may appear to be aimed at specific types of organizations, it’s always worth checking the small print of terms and conditions apply to confirm what the eligibility criteria actually is.
Although grants and industry-specific funding can be ideal for new businesses and small enterprises, you shouldn’t discount them simply because you’ve been operating for a long time or because you have a high turnover.
Many business funding opportunities are designed for larger and more established businesses to facilitate growth. When investors are looking for opportunities, for example, an established company may offer a reduced risk, which obviously makes the investment a more attractive proposition for the investor.
Ultimately, it’s important to consider every form of business funding. Whether you’re an entrepreneur with a great idea, a new company or an established business, there are plenty of business finance options that could help to propel your enterprise forward.
How can Audeo help?
At Audeo, we understand what it takes to find the right business funding. For business owners, the time-consuming and complex process of identifying business financing options, confirming eligibility and preparing an application makes securing grants and funding near impossible.
For start-ups, in particular, dedicating an appropriate amount of time to finding funding sources can prevent you from carrying out your core business activities. However, if entrepreneurs and business owners are unable to secure business funding, their growth opportunities are severely limited.
Audeo helps your business to thrive by navigating you through the choppy waters of business funding. Our dedicated in-house team, in conjunction with expert advisors and experienced accountants, will identify viable funding opportunities specifically for your firm and assist you throughout the applications process.
Whether you’re eligible for a start-up loan, eager to connect with an angel investor or you want to claim back research and development tax credits from previous years, we can help. As well as providing more information about the merits of each funding option, we’ll ensure you’ve explored every type of financing which is applicable to your business.
Once you know what all the options are, you’ll be able to make an informed decision about which type of funding you want to apply for. From there, we’ll work with you to prepare your application.
Successfully obtaining grants and funding relies on the quality of your application and accompanying documentation. Essentially, you need to market your business to potential investors and grant providers. By persuading them that you represent a secure investment or that you exemplify the objectives of their grant, you can successfully obtain funding.
Contact Audeo now
Our in-house team is adept at marketing businesses, both to prospective investors and grant providers, as well as to consumers and business clients. When you have expert assistance with funding application preparation, you can ensure that your business is shown in its best light.
Furthermore, our dedicated investment services will scrutinise every aspect of your application before it’s submitted. This ensures that you’re highlighting your eligibility throughout the application and enables you to showcase your suitability as an investee or grant recipient.
We’ve already helped scores of businesses obtain the funding they need, and you could be next. Our success rates have helped numerous companies and entrepreneurs secure the financing they need to launch new products, expand their services, reach new markets, access advanced technology and grow their businesses.
If you want to explore business financing options and obtain funding for your company, get in touch with us today. Call Audeo on 020 3105 5887 or email us at firstname.lastname@example.org to find out how our dedicated investment services can help your business to thrive.