Starting a small business without much money can be a difficult prospect. Typically most of us do not have a terrific amount of cash lying around to be able to make the purchases we need to get started. It can also be equally difficult for businesses that have been around for a short while, but don't have the capital needed to grow to the next level.
This article will be a quick run-through of various different sources of funding available, to help you sort out this mess and figure out what might work for you.
Local banks are in the business of providing funding to local businesses. It is the main reason they exist; they make money off of the interest. They are, however, by their nature, conservative so you will need to have done your homework and presented an extremely solid business plan, with some sort of collateral (such as your house). There's always a chance they will reject you. However if you believe they will accept, it doesn't hurt to apply.
If you can't get money from the bank, there's always the chance of the smart individual with some free cash willing to provide you with some solid funding to get you running. Angel investors typically will do this in exchange for some ownership of your company. If you have a great idea, and believe you grow to a very high level, you stand a chance of attracting interest. The risks means that you might end up losing control over your company just as it starts to succeed.
Small Business Loans or Grants
Often money can made available by government or non-profit organizations to start businesses that meet a set of criteria. If you are planning on opening a business in a depressed area and intend on employing many local residents, this may be an option for you. In some cases you may be required to match the amount of any grant provided, so this means that you are unlikely to be able to get full funding. However if you believe that you need a bit more than what you already have, this might be a good option for you.
Friends and Family
For many small businesses starting out, many people consider going to Uncle Joe or your friends down at the pub. It's a logical first step. These are the people who know you, and are most likely to take you seriously. Typically you won't be able to get much, but sometimes a few thousand pounds might be enough to make your first initial purchases. That said, it may not be your best choice, particularly if things go sour (as can be very common). If you are doing this, you need to be extra careful to let them know that there is risk involved and make sure it's clear. You don't want to ruin those holiday dinners.
Tap into Retirement Plans
This can be risky, as you could be eroding your nest egg, but it's an option. Some plans may not allow this, or they may require you setting your business up as an incorporated entity so that you can roll over your money.
Yes, it's all the rage these days. You have a great idea for a product, you put an offer out on one of the major crowdfunding sites such as Kickstarter or GoFundMe, and people provide you with small amounts of cash in exchange for some sort of free giveaway in the future. While you aren't likely to get a lot of money this way (unless you have an amazing invention that everyone wants), you can get some nice early injection of cash with very little risk. However, if the product you are selling is viable, but not particularly exciting to the trendy public, it will not likely get any interest.
Often all you need to get started is a small injection of cash to purchase your initial stock, equip your office, or hire some initial sales staff. Many banks are unwilling to consider any amount less than a certain amount. While you would likely love to get 500,000 pounds you really don't need it (just yet) and would have a hard time making an argument for it. Your idea may be great, but it might not be at the level an Angel Investor would want to waste their time with.
Maybe your family doesn't have any money, and your friends at the pub? Well, they're still at the pub playing darts. Crowdfunding would be nice, but you know your product isn't really that sexy.
One option that can work well, is to get a small line of credit from InFund. Where banks might turn you down because of some past blips in your credit history, InFund looks only at your most recent history to determine whether you are reliable. If all you need is a small amount; £3,000 - £150,000, you can get that quick injection needed to make it past those initial hurdles, and you can pay it back as soon as you can, with no penalty.
Nobody has taken charge of your business except you. A small loan from InFund could be what you need.