bfunded - Business - Funding

Funds and funders

It is important to identify the most appropriate type of finance and funder for what you want to do. The following information provides a brief summary of the different types of funds available and their pros and cons, along with details of where you may be able to access support to help you apply.

Remember you can search for funding for FREE at www.bfunded.org.uk

GRANTS

• A sum of money that is given to your business
• The main aim is often to support economic development and regeneration
• Grants are given by central and local government, the European Union, business support agencies such as Business Link, and a number of other bodies. Social enterprises can sometimes get grants from charitable trusts
• Each fund will have its own criteria that you will have to meet to be eligible to apply
• The funder generally will ask you to meet particular goals or targets
• The funder will monitor and evaluate how you have used the grant
• Funding will usually relate to a specific project or purpose, for example investigating a new market, developing a new product or service
• Grants are often less than 100%, so it's likely you'll have to put in some of your own money
• May be paid in arrears
• Don't usually have to be paid back.

AWARDS

• Provide opportunities to promote and showcase your organisation and your work
• Generally awards are one-off cash payments
• Mainly to recognise achievements such as fastest growing start-up, or best use of information technology by a small business, or success in exporting overseas
• Usually you need to enter a competition
• Can be given by government Departments, government agencies, business support organisations, local authorities, private companies and not-for-profit organisations.

LOANS

• Borrowing money from the bank is the most common form of financing available to businesses, either through a loan or an overdraft, or some combination of the both
• Banks will demand that the business can demonstrate some form of security against defaulting on its loan payments
• Interest will be payable on the loan or overdraft
• Amount borrowed plus interest must be paid back.

SOFT LOANS

• Soft loans are those that aim to help promising businesses or social enterprises who cannot provide the forms of security asked for by banks
• They usually offer the borrower special terms on either security requirements, or on interest rates charged. Payment of little or no interest may be a condition of the loan, or in some cases borrowers can organise payment holidays
• They are often available either directly from government Departments, or from local authorities and other bodies.

Examples include the Business Enterprise Fund in Bradford, which offers flexible loan options for small businesses, including a sharia type loan product that is non interest bearing, www.befund.org or Partnership Investment Finance, www.partnershipif.co.uk whose range extends from micro loans of up to £15,000 to equity funds reaching £1m.

VENTURE CAPITAL

• A way of raising finance where shares in your company (equity) is exchanged for a sum of money
• Venture capital is a common source of funding for small or growing businesses that have little or no money of their own to risk.
• Venture capitalists invest in these businesses with the prospect of a large return if the company takes off
• Investors will want to make sure they make a return on their investment so may specify, or be involved in, what the money is used for
• Investors can be private individuals or a partnership of businesses, or even the Regional Development Agency - the Yorkshire and the Humber Regional Venture Capital Fund was set up by Yorkshire Forward to assist small and medium sized businesses to grow and expand, www.yhef.co.uk/about_the_fund.htm
• Some of the advantages are that venture capitalists may have the ability to invest large sums of money which can help your business to develop and achieve fast growth. Investors also have a wealth of experience to help you in achieving the most out of the investment
• Some of the disadvantages are that venture capital may come with some conditions or involvement from the investors, for example venture capitalists will want to ensure they make money on their investment so may push for decisions that make quick returns.

Information compiled by J4B for bfunded 4 business, www.bfunded.org.uk

Where can I get support?

Bradford Kickstart

The Kickstart Knowledgebase contains lots of information to help start-up businesses and growing enterprises to work out what funding they need and how to get it, including advice about how to forecast cash-flow, an introduction to VAT, and grants for developing new products.

However, members of Bradford Kickstart also have access to financial help via their business counsellor. This includes assistance building a compelling business plan that can be used to secure a loan from a bank. Loans for £500 up to £30,000 are available to Bradford Kickstart members who have a strong business proposition but who cannot borrow from the bank. There is an additional £30,000 available for equity investments where appropriate, and business counsellors are able to access other funds to top up this amount if required.

These loans can be used for many purposes - from start-up capital to get your business up and running, to marketing and promotional exercises, and property grants to adapt your business premises - or even find new ones if required.
Contact Bradford Kickstart on 0800 953 9503 (freephone), email: info@bradfordkickstart.com web: www.bradfordkickstart.com

Other Help

Further help is available from local support organisations and agencies.