Alternative funding programs for UK startups
BY READERS DIGEST
9th Jun 2019 Technology
In the UK, there are quite a few different ways to finance a startup, but you don’t have to necessarily go down the traditional route. It is completely possible to find an alternative finance method such as Tiger Financial that is both beneficial and easy to obtain. For one, taking advantage of one of the many government options for start-ups can be a good alternative to bank loans and other finance options. There are many alternatives to get going with your startup, but it is best to do thorough research and think deeply about what you need from a loan and what you want to avoid.
Government Start-Up Loans
With the UK’s favorable business environment, the government provides start up loan packages from £500 to £25,000 to start or expand your business. According to the specialists at MoneyPug, which is a site from the UK used to compare personal loans, this government scheme is an unsecured personal loan, unlike business loans, and you’ll get free guidance and support to plan. Successful applications attain nearly 12 free months of mentoring.
But before you get excited, you should know a few things. To apply for one of these loans, you must live in the UK, be over 18, and have or plan to have a UK-based business that has been trading for less than 24 months. With a government-backed loan, you will be charged a fixed rate of 6 percent a year and you will be able to repay it over one to five years.
The regional growth fund is for businesses looking for less than £1,000,000. The idea is to help small and medium-sized businesses grow. Any business in England that has a growth plan and a project to invest capital in is eligible for this funding.
Another government financing option is the UK Export Finance. By underwriting bank loans offered to overseas buyers of UK services and products, the government takes on the risk of the loan. This means that lenders will be a lot more likely to approve the financing.
Grants
Grants are match funded, which means that to be eligible for one you must be able to raise finance either internally or externally to finance between 10 and 70 percent of the overall costs of investment. Still, grants remain one of the best funding sources for small businesses.
Research and development tax credits allow you to claim a significant amount of your development costs back in cash every year. The paperwork isn’t very complicated and there are expert agencies who can help you with it for a price. If your startup is going to focus on development, this may be the option for you.
Another alternative, which is more specific, is a childcare business grant, which is intended to support companies that are going into the business of childcare. The grant is offered by the UK government as a strategy to increase the amount of childcare available. If you are in this business or thinking about getting into it, you would do well to take advantage of this while it is available.
Apprentice grants support both training and work that are designed to meet the needs of employers. It takes anywhere from one to four years to complete and put together practical training. Funding depends on your area of business, but funding for up to 18 years begins at 100 percent.
There are also vouchers for innovation that provide a small government grant to develop a new idea or product. It is called Innovate UK and will help you find the expert you need from technology institutions, universities, design advisers, and more.
The small business research initiative provides contracts to help you find your business and carry out research. This is great for new products and services, the programme aims to fund new ideas and any business is eligible to apply.
Weigh your Options
With so many different avenues to gain funding for your start-up, there is no reason to wait around for a magic bullet. Money doesn’t fall out of the sky. To successfully fund your venture, it is best to both take a look at government programmes while acknowledging that other options out there. If you do thorough research and find the best route for funding your start-up, you will be able to get the finances you need to get started and expand.
