Funding
All start-up businesses will require funding in order to meet the start-up costs and ongoing working capital requirements.
Typical start-up costs will including obtaining the property from which the business is to be run (be it freehold or leasehold), the purchase of machinery and equipment, initial marketing and insurance premiums, the raw materials and professionals' fees.
The ongoing expenses of a start-up business will include rents in relation to the property, employees' wages, purchases of raw materials and ongoing insurance premiums. There are numerous ways that a start-up business can obtain the funding to meet these requirements.
The individuals starting the business may have sufficient savings to enable them to provide the necessary funding. If the start-up business is taking the form of a partnership it will need to be made clear in the partnership agreement exactly how much of the funding each partner is providing and whether this entitles them to a greater or lesser proportion of the partnership profits.
The start-up business's funding requirements can be met by borrowing the money. This will normally be from the major high street banks, but could also be from more specialist institutions such as investment banks or overseas lenders.
As with any borrowing from a bank the lender may require some form of security for the loan. This can take the form of a mortgage over the business premises or a legal charge on the business assets or shares (in the case of companies). Unless the business's assets are sufficiently valuable to cover the amount of money being borrowed it is likely that the lender will also require personal guarantees from the individual involved in starting up the business.
This is the generic name for sources of funding which come from a third party that is not a recognised lending institution. They can come in a variety of guises from 'silent partner' to 'business angels' to 'venture capitalists'.
Traditionally, these providers of funds will require a stake in the business in return for which they will provide the funds. The exact terms and conditions upon which this funding is made available will need to be governed in a detailed investment agreement.
There are various national and European governmental grants available to businesses. Depending on individual circumstances it is possible that a start-up business may be eligible for one or more of these grants.
It is normal for a start-up business's funds to be derived from a mixture of the above sources.
For more information please contact Simon Morris
Typical start-up costs will including obtaining the property from which the business is to be run (be it freehold or leasehold), the purchase of machinery and equipment, initial marketing and insurance premiums, the raw materials and professionals' fees.
The ongoing expenses of a start-up business will include rents in relation to the property, employees' wages, purchases of raw materials and ongoing insurance premiums. There are numerous ways that a start-up business can obtain the funding to meet these requirements.
Self-funded
The individuals starting the business may have sufficient savings to enable them to provide the necessary funding. If the start-up business is taking the form of a partnership it will need to be made clear in the partnership agreement exactly how much of the funding each partner is providing and whether this entitles them to a greater or lesser proportion of the partnership profits.
Borrowing
The start-up business's funding requirements can be met by borrowing the money. This will normally be from the major high street banks, but could also be from more specialist institutions such as investment banks or overseas lenders.
As with any borrowing from a bank the lender may require some form of security for the loan. This can take the form of a mortgage over the business premises or a legal charge on the business assets or shares (in the case of companies). Unless the business's assets are sufficiently valuable to cover the amount of money being borrowed it is likely that the lender will also require personal guarantees from the individual involved in starting up the business.
Private equity funding
This is the generic name for sources of funding which come from a third party that is not a recognised lending institution. They can come in a variety of guises from 'silent partner' to 'business angels' to 'venture capitalists'.
Traditionally, these providers of funds will require a stake in the business in return for which they will provide the funds. The exact terms and conditions upon which this funding is made available will need to be governed in a detailed investment agreement.
Government grants
There are various national and European governmental grants available to businesses. Depending on individual circumstances it is possible that a start-up business may be eligible for one or more of these grants.
It is normal for a start-up business's funds to be derived from a mixture of the above sources.
For more information please contact Simon Morris
