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How can companies at start-up or in a very early stage raise some cash?

If you at an early stage of company development raising cash or credit from your suppliers is sometimes very difficult. No one lends money without you taking responsibility for it. So, if you think that you can start a business, get a loan and, if the worst comes to the worst and the business fails, walk away from the loan, think again.

So, starting with the idea that raising money for a start-up is like taking a loan, here are 6 things that you can do.


Use Your Personal Credit Facilities

In starting a business it is important that you have both a plan for the business and a plan for your personal life. How long can you cope personally before you run out of cash and need to get a job? Will the stress of not having an income be too much for you or your partner? During the period where you can handle not having income you can use your credit cards or a personal bank overdraft, funding the company that way. Remember, unpaid credit card bills are expensive. So, looking for more structured loans makes a lot of sense.


Talk to Your Bank

Your bank wants you to succeed. After all, if you make money, so does the bank. They have a variety of instruments at their disposal, many of which you may not know about. They also have experience in talking to other small businesses, so may make some suggestions that you would not have thought about.


Extend Your Mortgage

This is usually one of the cheapest routes to free money, using your assets as most mortgages must not be used for business purposes. Contact your mortgage broker to establish how you can use mortgage. If, for example, you need to convert a room in your house to a workroom, it may be permitted.


Loans from Friends and Family

If your idea is good, then friends and family may be interested in helping you out as a loan, or even take a piece of the action. If all goes well, then they too can share in your success, but if it does not succeed, they will have lost their money and that could put a strain on relationships.


Business Start-Up Loans

These are government-sponsored loans at very good rates of interest, currently 6-7%. They are up to £25,000 per director/key member of the company and last for 5 years. They are a personal loan; so even if the company fails you must pay it back.


There May be Other Ways to Raise finance…

It takes a lot of work, but there are other ways and usually requires a detailed plan showing that you understand the market and can see how you will make sales. And, if you are starting your business, you need the energy to push on these.


Business Angels

Business Angels may offer funds at early stage, but can take a large amount of equity due to the risk. They do not often support start-ups. However, the right angel can really help a company move forward.Often a group of angels will work together and fund a venture collectively, with one of them taking a lead.



Whilst most accelerators/incubators offer help in getting companies started or helping them grow, sometimes they have funds to help companies. Talk to them; even if they cannot help, they may point you in new directions.


Peer-to-Peer Loans

There are organisationsthat arrange peer-to-peer loans. The interest rates are often high due to the risks involved and the process can be long-winded, requiring a detailed business plan.



There are 2 methods of crowdfunding – equity and sales. Equity funding is where you gather enough investors to raise the money required. Sales funding is where you offer either advanced sales of goods/services or some other incentive in exchange for money. Both require a lot of proposal marketing and can be very time consuming.



Nothing in this article is advice. It is outlining different ways finance may be raised. You always need to obtain advice from an IFA or similar type of person in order to decide whether to take any of the options outlined here.


The Next Stage

Once the business is running and you have clients and/or customers, then there are other ways to fund growth in the business. >>> Raising finance for a growing business


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