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Financing growth
Financing Growth
How do I finance the growth of my business?
Make sure you have a sound financial plan in place – this should be an integral part of your
business plan. You will need to know:
- how much you need;
- what the money will be used for; and
- when you will need it.
A detailed cash flow forecast is also essential to ensure you have enough money to keep your business going while you put plans in place to expand.
What sources of finance are there?
- Formal loans – a bank may provide a loan if you have a good business plan. You will have to pay interest and repay the loan according to the terms of the loan contract.
- Loans or investment from friends and family. This can be both personally and financially risky, but works for some people.
- Equity finance – if your business has good prospects, a financial backer (‘business angel’) or venture capitalist may agree to invest in your business. Find out more about outside investors
- Other access to finance programmes or government support may be available if, for example, your business is in a deprived area. Find out more about access to finance on the national Business Link website.
What is equity finance?
Equity finance is a way of raising money in return for a share of your business. The investor would probably also expect to have some control over the way the business is run.
You will not usually have to pay interest, or return the money by a certain date. Instead, your investor expects to benefit from dividend payments.
You will need a professional and compelling business plan to successfully apply for equity finance.
The two main providers of equity finance are:
- business angels; and
- venture capitalists, also known as private equity firms.
Business angels are wealthy people who will often invest in a new or growing business.
Venture capitalists usually provide significant amounts of money for rapidly growing companies that will eventually float on a stock market.
Where can I get more information?
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