A Summary of Sources of Finance for Starting a Business

  • Price: £3.60
  • Published: February 2016
  • Type: Business Information Factsheet
  • Format: PDF

Many new firms fail because the proprietors do not have enough cash to last them through the critical first few months of trading when their sales revenues are only just starting to build up.

Before business owners begin trading, they need to make sure they have enough money to set up the business and cover initial running costs. If they or their business partners don't have enough money themselves, they will need to approach other sources of finance.

This factsheet outlines some of the options available for sourcing external cash to help people start up in business. There are various sources of finance available, but for new start ups, the most likely options will be:

  • Personal savings and informal loans from family or friends.
  • Bank loans and overdrafts.
  • Credit cards.
  • Private equity investors, including business angels.
  • Crowdfunding, where money is raised from large numbers of investors.
  • Government funding schemes.
  • Local authorities.
  • Responsible finance providers (RFPs).
  • Credit unions.
  • Other independent business support organisations and schemes.
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