Funding Sources

There are in general two sorts of outside funding for a new business - those that you have to repay (loans) and those you go not (grants) - info as at Feb 2021

Grants

Usually given by the Government or a foundation or trust - usually with a specific aim and clauses as to what the Grants are used for, examples are:-

What price should I choose?

There are three broad options here, cost based, customer based or competitor based pricing. By modelling these options we can decide on a price that best fits your needs and evolves with time.

New Enterprise Allowance

This aims to help those claiming certain unemployment benefits to become self-employed. If you complete the NEA scheme and your business starts trading, you can receive a weekly allowance valued up to a total of £1,274 over a 26 week period.

https://www.gov.uk/government/collections/new-enterprise-allowance-campaign

Prince's Trust Grant

Businesses must have started up in the last four years and be run by someone aged 18 to 30. Young people who are in the process of starting a business and don't have any other source of income during the crisis are also eligible to apply for a grant

https://www.princes-trust.org.uk/help-for-young-people/who-else/employment/grants-funding

Loans

Usually given by the Government or a financial institution - either secured or un-secured and can be taken by either he owner or the new company if limited

Secured - means the loans is linked to an asset - e.g. a premises (or another asset) so if the loan is not repaid the lender can make a charge against the asset (possibly sell the asset to cover the loan debt)

Un-secured means if the loan is not repaid the lender has to take action in the courts against the borrower so gain access to the borrowers assets.

Often for new businesses the funder requires the loan to be taken in the name of the owner so if the business fails the lender can look to the owner to repay the debt.

Examples of Loans

Bank Loans or Funder Loans

High street banks or funder such as Funding Options offer loans to start ups but often this is linked to holding an account with them - rates and terms vary from lender to lender.

Now lets look at building the financial model in the next section - Financial Modelling - Part 1

Business Planner UK can help you grow your ideas into a viable business - visit us at www.businessplanneruk.com to find out