How To Get Fast Business Funding
Securing fast business funding will hinge on a few varying factors. Each different type of business funding comes with eligibility criteria, application processes, monetary limits and a waiting period. However, not all business funding is made equal. Moving away from the hefty paperwork requirements and rigidity of traditional banks, business finance institutions can now offer same-day decisions, flexible terms and even the opportunity to check what you can borrow without affecting your credit score.
Other forms of business funding include things like grants, which don’t need to be repaid but can be tricky or competitive to get, with lengthy application forms and longer waiting times.
Further methods include crowdfunding or peer-to-peer lending, which arguably makes raising capital easier thanks to the ‘many-to-many’ approach. So, what does fast business funding look
like in reality, and which is best for you? Below, we take a look at the different options.
What are the different business finance options?
The good news about business finance is that there are so many options available. The different types of business finance can usually be allocated into one of the following three categories:
● Grants which you don’t need to pay back.
● Loans which you’ll need to repay, usually with interest.
● Investors who purchase a stake in your business.
Even within these three categories, you’ll find variation. There is no ‘best’ solution across the board, only what is best for your business.
Government Grants
There are hundreds of government grants available for businesses throughout the UK, with an emphasis on smaller businesses getting access to funding. Perfect for securing new premises,
staff or essential assets like equipment, a grant doesn’t need to be paid back. You will, however, need to fill out potentially lengthy application forms and be mindful that you might have to wait
for a while, too. You should also be aware that if you make an overall profit once the grant income is also included, it might be subject to tax.
Personal Investments
Another obvious place to start is with your own money. If you have personal savings or investments, you might wish to put these behind your business to get it off the ground. While you won’t need to complete any applications or pay any interest, you are exposing yourself to the risk of losing your savings if the business were to fail – this can be particularly risky if you’re entering into a partnership with someone else.
Crowdfunding
Crowdfunding platforms are a popular way to get smaller investments from larger numbers of investors. Some well-known crowdfunding ‘unicorns’ that have succeeded with this approach
throughout the years include Brewdog, Peloton and Monzo. This is a great option if you’re a B2C organisation with a compelling message or community benefit that will resonate with
people.
Angel Investors
High-net-worth individuals (HNI) who provide seed funding to startups in exchange for a stake in the business are known as angel investors. Often, angel investors are successful
businesspeople who can also offer invaluable guidance. However, you’ll need to inspire them with an outstanding pitch and proposition first. Around £1.5bn is invested by Angels in UK businesses every year – so brush up on your elevator pitch!
Equity Investment/ Venture Capital
Venture capital is like angel investment, but on a bigger scale. You’ll need to convince investors, who often act on behalf of a wider firm, to buy a stake in your business – think of it as a
‘Dragon’s Den’ type scenario, where you’ll need to make it through various rounds of competitive pitching to secure the funds.
Peer-to-Peer Lending
Peer-to-peer (P2P) finance is typically a lending agreement between two individuals which bypasses traditional banks and financial institutions. Sitting somewhere between crowdfunding
and a business loan, the money comes from everyday people who are looking to get better returns from their savings than with an everyday savings account. Usually facilitated by an online platform, P2P lending can serve as a great alternative should you have faced rejection elsewhere. You’ll still be vetted by the platform and will pay back the
loan with interest, similar to a traditional arrangement.
Business Loans
There are over 80,000 firms offering business finance products in the UK, which gives you an idea of how many different business loans are available. The products, which include things like
working capital loans and business development loans, will vary between lenders. From traditional banks to brokers and own-book finance providers, each lender will also have their
own specific terms to adhere to.
What is the best business finance option for me?
Grants, loans, and investments are not a ‘one size fits all’ solution, and the best business finance option for you will likely be contingent on various factors, including the size of your
business, the amount you need to borrow and what time frame you’d like to repay it over. There’s no single best option for everyone. Certain funding methods may have their advantages, but they may not always be the right choice for you.
Creating a detailed business plan will not only keep you on track in terms of goal-setting and achievements, but it is also a useful tool for understanding your financial options.
Will my credit score affect what business financing I can get?
Yes. When reviewing your application for any finance, both your business and personal credit scores can come into play. By having a good business credit score, you are likely to be
approved for loans and even gain access to better interest rates. Essentially, a high credit score will tell lenders that you are a low-risk proposition. The lender will have confidence in your ability to meet the repayment requirements and clear your debt, thus increasing your likelihood of getting approved.
On the other hand, a poor score may restrict your borrowing options or come with higher fees and interest rates. A low credit score can be considered a ‘red flag’ for lenders who might refuse your application or limit what you can borrow. Ultimately, it can be good practice to take out a manageable line of credit from day one of your business, so that you’re building a good credit
score in case you ever need to use it.
Want some more insights on how to improve and maintain your business credit score? Take a look at our guide here.
Find Out if Your Business is Eligible For Funding Without Affecting Your Credit Score
Want to get answers on business finance without affecting your credit score? Unlike traditional (and lengthy) loan application processes, the eligibility checker from White Oak UK allows you
to find out what finance you’re likely to get approved for without risking a rejection or a permanent note on your credit report.
This exciting new facility conducts a ‘soft search’ on your business, which requires just a few basic details so that your chosen lender is able to take an initial look at your credit report. These
types of searches will only ever be visible to you, and not to other companies or lenders. Think of it as a snapshot of your financial history, which allows those reviewing your business to make
a decision on whether to lend to you or not.
Sound good? Try our eligibility calculator to get an instant answer on what business funding you’re likely to get.
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