Choose the right finance when starting a business

Finance options for new businesses


The type of finance you choose will depend on what kind of business you are starting, how much money you need and what you will use it for. Consider the following finance options for new businesses:

  • Use your own savings or personal borrowings to fund the business, particularly if you can't obtain finance or investment from external sources - see advantages and disadvantages of using your own money to start a business.
  • Borrow money from family or friends. You should carefully consider the risk that they could lose their money if your business fails - see financing from friends and family.
  • Borrow from a bank if you have a credible business plan and can offer some security. Many businesses use overdrafts for day-to-day borrowing and to manage cashflow, and loans for long-term funding, or to finance large purchases such as equipment - see bank finance.
  • Aim to attract outside investors - eg by selling shares to business angels or venture capitalists. This can provide short-term finance without the need for repayment, and can also bring in expertise along with funding. However, it usually means giving up shares in your business, and investors may want some control over its management - see shares and shareholders and equity finance.
  • Qualify for a grant or government support. These can provide very cheap financing, and often come with business advice or subsidised consultancy. However, there is usually a lot of competition for grant schemes, and you will need to meet various criteria - depending on the scheme - see grants and government support.
  • Qualify for a government loan with Enterprise NI's Start Up Loans scheme.
  • Consider commercial lenders - such as insurance companies and building societies. You may get a better deal - eg lower interest rates - and they are generally less restrictive.
  • Look for finance from other areas - eg from a community development finance institution - if your business only needs a small amount of funding, or if you are setting up in a deprived area, or in a sector not normally covered by banks or other lenders - see other sources of business finance.
  • Raise funds through crowdfunding which raises finance by asking a large number of people each for a small amount of money to invest in your business - see crowdfunding.

Most businesses use a mixture of finance sources. For example, you might invest your own money to cover market research and borrow from the bank to purchase equipment and machinery.

For further information see business financing options - an overview.

The Northern Ireland business support finder is a searchable database that can help you find publicly-funded and not-for-profit sources of business assistance you may be eligible to apply for. Support may be available in a number of forms, including financial assistance and free or subsidised advice services.

See financing your business: the options to watch a video that outlines business finance options that may be available to you.