Loans
If you're determined to make your business a success, a loan
can be one of the least-expensive ways to raise capital. Your
loan provider will tell you the exact rate, but as a guide:
- Startup Loans Company loans are around 6%
- New Enterprise Allowance loans are around 6.2%
- Bank loans are typically between 7.9% and 12.9%
Bear in mind that a business startup loan will normally be
YOUR responsibility to pay back, not the business's. That means
if the business fails you'll still have to pay the money back.
Kickstarter
is an alternative to a loan which can work very well for a startup. You
effectively raise funds by pre-selling your product. So not only
do you get the cash injection, but you get customers too. Potentially a
great solution, if it works for your business idea.
Equity or Angel Investment
You might want to consider other alternatives such as Equity or Angel
investment. In these cases, you don't have to make repayments but instead
you give away a chunk of your company to the investor. This normally also
means you have to plan to sell your business (your "exit strategy") at some
point - that's where the investor's share turns into their profit.
If your business is a huge success, equity investment costs you much more than
a simple loan. However, you'll have the benefit (or drawback!) of a business
partner asking about your business to make sure you do what they expect.
There are no repayments either - which could be attractive for you.