Funding for Business
Finding small business funding is one of the survival skills needed for small business success. Whether you’re a start up or growing business, learning the basics of raising capital will go a long way to ensure you stay in business.
1. Grants: Support for SME’s can be provided through access to business consultancy/advice and the provision of grants. Grants are available for many initiatives including supporting feasibility studies, employment, research & development, training and marketing. The principle national grant aiding authorities are:
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- Enterprise Ireland – supporting the development of businesses which normally employ greater than 10 people
- Shannon Development – helping tourist and other businesses in the greater Shannon region
- Údarás Na Gaeltachta – promoting businesses in the Gaeltacht areas
- City & County Enterprise Boards – fostering early stage businesses employing less than 10 people in local and regional areas.
- InterTrade Ireland – Business development body, promoting North-South trade by building business capability and competitiveness.
a. Short-term Finance
i. Business Overdraft Facility – This is a relatively cheap form of finance when used as a short term solution however it can be an expensive form of finance if used on a permanent basis
ii. Short Term Loans – Loan are a provided over a fixed term and interest is charged in the outstanding balance
iii. Invoice Discounting – This form of finance can improve cash flow by turning as much as 80pc of funds tied up in unpaid debtor invoices.
iv. Factoring – Similar to Invoice discounting however the Factoring provider also manages the collection of the outstanding invoices and deals with the debtor directly.
b. Medium-term Finance
i. Term Loan Finance – Rather than taking a loan out over three months it can be spread out over up to seven year. Useful for plant purchase, changing fixtures and fittings and computer equipment
ii. Hire Purchase – Allows for an asset that is purchased to be security against the finance borrow. The equipment can be used while a business is paying off the loan and ownership transfers when full payment is made
iii. Leasing – Leasing can be an option if a business needs to purchase equipment and does not have the capital to spare. Regular payments are made to lease or rent the asset from a Financial Institution or lessor, however the institution of lessor always retain ownership of the asset.
Other forms of funding include
3. Venture Capital: Venture capital is the provision of third party funds in exchange for a percentage ownership of the business.
4. Business Angels: Business Angels are private investors who invest smaller amounts of finance. More information on business angels is available at www.businessangels.ie