Funding options for start-up businesses

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We know that many AAT students start their own accounting and bookkeeping businesses. If you’re currently thinking about trying to ‘set up shop’, this blog post will help you understand some of the funding options available now.

Here’s two secrets that successful entrepreneurs learned long ago: first, launching a business on a shoestring is the perfect way to acquire the skills you’ll need to make the venture profitable over the long term; and second, the search for funding for your new venture has more chance of success if you look beyond the obvious.

The truth is that high street banks rarely lent money to start-ups even before the financial crisis – and they still don’t. But that doesn’t mean funding is impossible to find – even better, you may not have to pay it back.

Where can I get a grant?

There are hundreds of organisations that offer grants to small business founders. Many of them are Government-backed schemes operating through departments of both central and local government, as well as agencies such as local enterprise partnerships. Then there are independent organisations such as The Prince’s Trust, which focuses on supporting young entrepreneurs, and specialist groups that offer finance for businesses engaged in very specific activities.

There are so many grants available that the difficulty for many start-ups is not so much obtaining funding, but navigating through the support options in order to find the perfect match.

There are two good places to start. The government runs its own business finance support finder application, which lists hundreds of different grants and enables you to search according to criteria such as location, type of business and the stage your business is at.

Alternatively,, set up by the main banks in response to criticism of their failure to fund small businesses, offers a similar search facility.

Both web sites will help you narrow down the search for grant funding so that you can hone in on the organisations where you have the best chances of success. It’s important to be realistic – grants tend to be relatively small (usually no more than a few thousand pounds) and you’ll have to meet strict criteria in order to win funding – you’ll certainly need a well-researched and coherent business plan, for example. But find the right scheme and your business may get a hugely important slug of capital to get it going, with very few strings attached.

What if I can’t get a grant?

If your business doesn’t qualify for a non-repayable grant, it may still be able to get a loan on preferential terms. The Government’s Start Up Loans scheme offers start-ups the opportunity to borrow up to £25,000 at the very low interest rate of 6 per cent – plus you don’t have to start making repayments for a year.

The Prince’s Trust runs a similar scheme, albeit offering smaller loans (though at cheaper rates) while organisations such as Big Issue Invest offer low-cost debt finance to businesses set up as social enterprises.

Finally, if you’re currently unemployed, the Government’s Enterprise Allowance scheme could be a great way to finance your start-up idea. Anyone currently receiving Jobseekers’ Allowance is entitled to apply for the scheme, which pays an allowance of £1,274 over six months as you work to get the business up and running. The money doesn’t have to be repaid.

For more top tips on funding your new business venture, have a look at this AAT Comment article which outlines some of the best alternative ways to acquire finance.

David Prosser is a freelance journalist who specialises in writing about business, entrepreneurs, personal finance, property and investment. David has worked across all the major broadsheets including The Observer, the Daily and Sunday Express and, most recently, The Independent, where he spent several years as Business Editor managing the newspaper’s business coverage. David will be a guest blogger on AAT Comment for the next 4 weeks – David’s blogs will appear every Monday.


David Prosser is a former business editor of The Independent .

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