by Chris Nizzi

Created on: September 28, 2010

To start a business from scratch without finance in the shape of a grant or loan is not easy.

 It's only when you look at the business plan, sales and cash flow projections that you realise how much it really is going to cost to start a business and whether or not the intended business is viable.

If external finance is required to start a business, then loans and grants are available to help even in the current difficult economic climate.

Use Google to search for Business Loans or Business Angels and you'll be surprised at the number of sources of finance available to start a business. They range from banks to various government organisations, private organisations and business angels.

For instance, most banks in the UK operate the Government Load Guarantee scheme through which the government guarantee 75% of the loan to the lender.

A source of good information is the local branch of Business link. An organisation run by the UK government which offers comprehensive advice and guidance to anyone who intends to start a business.

If is impossible to list all of the sources of grants and loans here but work through them to understand what's on offer. 

Whichever route you go down to obtain a grant or loan, you will need a comprehensive business plan complete with a detailed cash flow projection that provides a model of how the business will operate in every respect.

Time spent in advance preparing these documents will stand you in good stead when presenting to potential providers of funding.

Another source of grants are local government departments such as councils.

They can offer grants where the business benefits the local community or other concessions.

For instance, housing a business is always a big expenditure item when the proposition is viewed comprehensively. It's not only renting the building but also paying the business rates and service charges.

As of October this year, the government is offering a grant that pays the business rates on premises occupied by a start up business for the first year.

If the premises are council owned, a rent holiday of up to three months can often be negotiated depending on the preparation needed to make the premises fit for purpose.

Again where council premises are involved, the rent can also be negotiated in terms of making an offer.

Although these are not strictly grants they can be viewed as such. When summed up, they present a considerable saving in the all important first year of operation.

Always ask what's on offer. You may be pleasantly surprised.

However, a word of caution when viewing offers of grants or loans. Always have them reviewed legally to understand the associated conditions.

Equity may be required in exchange for the grant or loan. Some might attract a high rate of interest reflecting the associated business risk. A grant may not be repayable but could have conditions attached that render it as non-viable.

Always have a clear understanding of the implications of signing up for any offer.

In summary, if you want to start a business, with work and due diligence, finance is obtainable in the form of loans and grants.

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