Most banks have offerings for start-ups, however they are very fussy about whom they fund.
The first thing to realise is that lenders always want to make sure that they will get their money back even if your business fails. This makes sense since banks use public savings to fund these types of investments and they expect to earn interest, just as we expect to earn interest on our savings accounts! As a way of guaranteeing that they will get their money back, lenders may expect you to provide collateral at least equal to the amount of money you need to borrow.
The problem for small businesses is that few of them have money or assets. If they did, they wouldn't need to borrow money! This is a real 'chicken and egg' situation – you have to have money or assets in order to borrow money. Fortunately the government has realised the huge problem this poses for small businesses and has a handy solution called the Khula Credit Indemnity Scheme. This is administered by SEFA who have formed relationships with all of the big banks. If a small business needs to borrow money but doesn't have the necessary collateral, then the bank can apply to SEFA to stand as a guarantor for a percentage of the collateral. Note: SEFA will stand guarantor only for a percentage of the collateral amount (varies from 10% to 90% of the collateral amount), which means that they still expect some contribution from you, but it will be considerably less than you would have normally had to pay.
Before lenders decide to fund you, they will want to know as much about you and your business as possible.
1. What type of person are you?
2. Are you good, or bad, with money?
3. Is your business idea a winner or a loser?
4. What is your business idea? Do they believe it will make money?
5. How much collateral do you have?
6. How much money (or value of your assets) can you put forward as collateral?
Finfind provides its services free of charge to businesses seeking finance. Our primary purpose is to link SMEs with all the relevant finance providers and finance products that match their funding needs. As a matching service we are not required to be a registered finance provider as we do not loan money directly.