Celebrating the people behind British small businesses

Top tips for getting on the funding ladder

getting on the funding ladder

Finding funding for your small business can often seem like a daunting task. Whether you require a start-up loan, or a loan to improve cash flow, there’s always the worry that you’ll be rejected by the bank and left with no alternative other than to face slow growth, or worst case scenario shut up shop completely.

However, the alternative finance industry is opening doors for small businesses that weren’t previously there to be opened, and now, a ‘no’ from the bank doesn’t always mean a ‘no’ for good. The emergence of solutions such as Crowdcube, Startup Loans and Funding Circle, have meant that SMEs now have a range of ways to access that much needed finance.

With so many financial solutions now available, it can be a confusing landscape, and for a small business owner with limited experience and time, it can often become an intimidating task. Earlier this year, it was found that alternative finance has been responsible for £1.75 billion in lending and investment this year! There are currently around 108 alternative finance options, ranging from peer-to-peer lending, to crowdfunding. With so many possibilities, if you consider the following key areas, you’re sure to find the journey to funding a breeze:


When setting out to gain funding, getting the exact number right at the beginning is an absolute must. It’s not a case at taking an educated guess, but rather calculating exactly how much you need to borrow, and how much you can afford to pay back and when. A solid business plan in place from the start will help you with this; it will help you to prepare financially, which will in turn help you to determine how much funding you require.

It’s also important to allocate an area of the business that this money needs to go. There are such a range of options available, specialising in such niche areas, that you must be able to pinpoint exactly where the cash will be used. For example, there are hundreds of crowdfunding platforms in the UK, but these are divided between different  models, be that equity or rewards based, so knowing from the start where every penny will eventually go will help you to make the right decisions.

Have your financial documents ready

Although alternative finance platforms aren’t restrictive like the banks, they still will want to know about your business’s financial fitness. What are your monthly revenues? How many sales do you process with credit/debit cards? Many lenders will also want to see your bank statements, VAT returns, or company accounts. It would be wise to have these filed away so that when the time comes to turn to alternative funds, you’re armed and ready with the numbers required to get the funds in your account within a matter of hours.

Be honest and open

Know what your financials abilities are, and be honest with yourself about them. You don’t want to commit to a loan that will stress you financially every month. This is what makes a business plan so valuable, having planned meticulously in the run up to accessing finance will serve you well. Knowing the exact amount that you need to borrow, and exactly how much your outgoings are will mean that you will take a loan with a monthly repayment amount that you can comfortably pay off.

And compare

As we’re seeing, the options out there really are astounding, and it can be easy to become overwhelmed with the choices. Taking a measured approach is key here, and checking through your options with an intermediary, or with a variety of lenders directly is a wise move. This has quickly become a very competitive market and you should make sure you get the best suitable option for your business. The emergence of comparison sites has made this a worry that needn’t be, so it’s important to utilise the tools at your disposal.

In 2014 alone, across Europe, €201m of early-stage, growth and working capital funding was provided to European SMEs and start-ups through alternative finance platforms. This is a real opportunity and small businesses have the chance to tap into this resource to grow their businesses. So long as you plan and prepare ahead of time, there’s no reason why you can’t get your next business venture funded.


By Sharon Argov, CEO of Fundbird

Featured image ©Alex_Oakenman