Types of finance
- For short-term funding and/or working capital.
- Is quick and easy to arrange and very flexible.
- Renewed annually with your bank and is repayable on demand.
- Annual fees plus interest rate.
- To fund purchase of equipment or machinery – also known as Hire Purchase (HP)
- Debt secured against the asset and the interest rate is fixed.
- Monthly payments aid cash flow.
- Finance over the useful life of the asset.
- Can be penalties if you want to repay early.
- Typically for longer-term finance/start up costs.
- Term of loan is usually fixed giving certainty.
- Option to fix the interest rate too.
- Banks usually ask for security against the debt.
- Usually non-repayable (provided you comply with the requirements).
- Schemes change frequently.
- Can have very specific requirements.
- Based online seeking investment from a large group of people.
- The two main types of crowd funding are equity based and rewards based crowd funding.
- Equity based crowd funding is selling a share in your business in exchange for an investment, whereas reward based is seeking investment in exchange for a supply of product or future discounts or members.
- Crowd funders often have a higher appetite for risk than traditional financial institutions and as such can be a useful tool for raising capital for a fledgling business.
- A successful crowd funding campaign can add publicity to a project or venture which can be extremely helpful for the future marketing of a project.
Other sources of funding might include:
- Business Growth Fund
- Enterprise Finance Guarantee scheme
- Receivables finance