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Financing your business

Sources of finance

There are several options for financing your business:

  • Loans from a bank or other type of financial institution
  • Using your personal savings
  • Borrowing money from friends and relatives
  • Venture capital.

Government funding for starting or buying a small business is rare.

If you have decided to raise capital by borrowing money you need to consider what term of finance will suit your needs. It is important that you match the nature and terms of the loan to the purpose for which the finance is being used.

For example:

  • Short term finance such as bank overdrafts, or debtor finance
  • Medium term options like personal or term loans, or leasing
  • Long-term tem loans

The creation of a business plan that is both realistic and manageable will be of great assistance when you approach possible sources of finance. Whether it is your family or a bank manager, any possible investor will want to see that you have well-planned and achievable strategies that will make your business a success.

When applying for a loan, expect to provide details on the following:

  • Your financial and personal history and security
  • The business plan
  • The loan amount, purpose, and your ability to repay
  • Financial statements for the business including past and future cash flow budgets
  • Input from your accountant or financial advisors

Check out the Financing Your Business business guide.