Raising finance is an art form. It’s one of the subjects we deal with the most for clients who know what they can offer, yet haven’t scoped out the full means to bring it to market.
It’s time we spoke about how to raise business finance, from tax credits to an investment round. There’s much to take in. So, let’s go through some of the options one at a time, and uncover a choice that suits your brand.
Be careful with the traditional choice on our list, because a bank is likely to ask for collateral to back up the loan valuation. If you don’t have much capital or sellable assets, this could be an issue. Unsecured loans have higher interest rates too.
But equally, bank loans do help many businesses get to a jumping-off point, and are perhaps most suitable for startups that don’t have their own office or manufacturing setup. You’re only paying on the interest. It’s not like an investor agreement, which cuts into your profit unless you buy the stake back.
Government tax credits
Heading an R&D project? Good news – you are eligible for one of two special tax relief schemes. The first is for SMEs: you must have fewer than 500 staff, and a turnover less than €100 million. The second is for larger businesses and levies 12% off your qualifying R&D expenses. Both are a boon for provable investment goals.
However, HMRC will want to verify that the development undertaken is new, useful and necessary to your idea. You’ll have to prove all of this, as well as evidence tests that ruled out other options.
An increasing number of brands have gotten their start through crowdfunding. Indiegogo, Seedrs, Trillion Fund and more are waiting for that crucial elevator pitch to reach thousands of donors in the UK and abroad.
It remains a tricky prospect; while the results can be astounding and lead to a swift outcome for some, others can fall entirely flat and divert their attention from more secure alternatives. When we ask how to raise business finance, we should remember that even crowd funders want a stake in your company or a reward for helping out. You may want to set an investment deadline, film a video that shows why you deserve it and think on the gifts for fans who back your concept.
With this source of finance, you don’t just get the money – the individual’s time, contacts, experience and perspective become yours too if they’re willing to share. As long as your pitch is on point, there’s no need to put up capital. Plenty of investors simply recognise the solidity of a good business plan, and your drive to realise it.
What’s really crucial, though, is a metrical ground on which to build those ideas. Profit and loss history must be taken into account; so too will any perceived dips in the earnings you’ll make in the near future. An investable business is more than an inspiration – it can demonstrate how the numbers line up.
We’ve analysed some of the main investment sources here. Yet there are further ways to find support. How to raise business finance? Contact RJF and see where we might take you.