Funding options for your business

Securing the right funding for your business can mean the difference between success and failure, and there are many options beyond traditional bank lending that companies can explore. Here are just a few.

Pension-led funding

Research has revealed that this lesser-known form of lending could release ten-times the amount of funding as a business bank. With an estimated 40% of UK businesses with funds in pension schemes, these funds could be directed to pension-led funding.

Pension-led funding requires an independent valuation of a firm’s Intellectual Property (IP), with monthly repayments of interest or license fee going back to the director’s pension fund.

Angel funding

Angel funding plays a key role in supporting the entrepreneurial economy, pumping a yearly figure of £800m into UK businesses.

Angel investors are normally wealthy individuals, or groups of individuals, who are prepared to lay their investment down for a business in its risky early stages, with the hope that the venture will take off and provide healthy returns.

Those considering turning to angel investment may want to look at trade associations such as the UK Business Angels Association as a starting point in their research.

Crowd funding

Crowd funding has been seen as a radical departure from traditional investment methods and sees networks of individuals coming together to fund a creative start-up/idea, with small amounts of equity being sold to a number of investors.

Although this funding medium poses a number of issues, including the lack of regulatory framework, a survey of Real Business readers revealed that more than half (51%) of those surveyed argued that within the next five years crowd funding will become a valuable source of finance for SMEs.

Entrepreneur bonds

Some businesses have turned to raising capital from their customers in order to fund their expansion plans. One of the most prominent uses of entrepreneur bonds was by Hotel Chocolate who offered a three-year, FSA-approved "chocolate bond”, investing £2,000 for a gross annual return of 6.72%, or £4,000 for returns of 7.29% to customers, which paid for twice-monthly deliveries of the company’s product.

The bonds were then fully redeemable at the end of the three-year period.

If your company is contemplating a business turnaround then seeking professional advice could provide the support you need.

If you would like to have a free no obligation chat with one of our advisers please call us on 0207 186 1143.