Alternative ways to secure investment for your business

Due to the financial uncertainty the UK currently finds itself in, SMEs can struggle to get traditional business funding from a bank. If they do part with their money, it may come with so many stipulations that it quickly becomes a pair of golden handcuffs, stopping you from doing what you really want with your business.

alternative financeTherefore, if you’re looking to start or grow your business in 2017, you may be better off seeking alternative forms of investment. To help give you some ideas, here’s a look at three alternative ways to secure business investment this year.

Friends and family

If any of your friends and family are in the position to lend you money to help get your business off the ground, it can be a great form of alternative investment. Unlike a traditional investor like a bank, your nearest and dearest are unlikely to hound you for the money at any point, as long as they’re sure they’re going to get it back eventually.

However, if you do choose to borrow money from the people you’re closest to, you should proceed with extreme caution. Nothing can sour a relationship like a disagreement over money, so you should follow a few basic guidelines whenever you borrow from a friend or family member:

  • Only borrow money from people who are in a position to lend without risking their own financial stability.
  • Make every investment formal by having official contracts drafted by a lawyer. Take these as seriously as you would investment with the bank and make sure to hold up your end of the deal.

Follow this advice and you’re sure to have success with this kind of investment. When your business begins to thrive, you’ll then be able to pay those who believed in you at the start back and then some.

If raising funds from your nearest and dearest seems like the best option for you, take a look at Fast Company’s guide to borrowing money from family and friends for advice on how to get started.

Take out a small business loan

If you’ve looked at the numbers and found that your business needs a cash injection to get to the next level, your best option might be a small business loan. But, given the UK’s current financial instability, high-street banks are reluctant to give out loans to fledgling companies.

Fortunately, this doesn’t mean your venture has to be put on hold. Companies like H&T offer small business loans against assets such as cars and jewellery, meaning you don’t need to undergo any income or credit checks in order to get your hands on the cash you need.

Whether you’re looking for a few hundred pounds to get your business off the ground or tens of thousands to invest in new staff or more efficient equipment, this could provide you with a fast and convenient cash injection. It will give you the funding you need to expand your company without having to go through the stress of pitching to investors, making it a great option for any SME.

Grow it organically

If you’re looking to grow your business, your first step should be to ask yourself whether you could do so organically. While this method of scaling your business isn’t as glamourous or exciting as taking on tens of thousands of pounds from investors, it comes with a number of benefits.

The freedom — not to mention the financial rewards — that come from growing your business without any outside help simply can’t be matched by any form of investment. Furthermore, the time you save not having to worry about delivering the perfect pitch to every investor who’ll see you will free up your time to get your business running like a well-oiled machine.

If you can figure out how to pull it off, there’s no better way of growing your SME than expanding its operations organically. However, bootstrapping a business is a lot easier said than done — while it offers the best potential rewards, it’s also the hardest to pull off. If you think taking your SME to the next level without having to take on investment sounds like the right option for you, take a look at Entrepreneur’s article on the seven ways to bootstrap your business to success.

So, there you have it: three alternative ways to raise the capital you need to grow your business. If you’re one of the many business owners struggling to lock down funding for your SME in the current financial climate, these can be great ways to secure investment at a time when banks are reluctant to lend to small businesses.