Starting a business during an economic downturn

Sources of start-up finance in an economic downturn


Finding the funds to start your business can be a challenge during an economic downturn. Financial institutions may switch their focus to less risky forms of investment.

However, with a strong business plan, you may find borrowing may be relatively cheap, as loans may be more affordable with lower interest rates.

Additional funding options may become available as government planning switches to helping economic recovery.

Ways to source finance in an economic downturn

If you need to raise money to start up your business, there are various options, including:

Essential to raising finance is convincing investors or grant bodies that your business is sound. This means showing that your idea is worth investing in and that you have what it takes to run your own business successfully in tough times.

Top five tips on getting finance in an economic downturn

  • Make sure you have a realistic business proposal. Have you calculated the money needed to start-up?
  • Think about and plan your ongoing budget.
  • Start to plan your finances by thinking about costs, living expenses and sales targets - and whether these are realistic given the economic conditions.
  • Make time to research the market conditions in the downturn. It helps to show you are serious about your business.
  • Be prepared for hard questions.

Other finance options in an economic downturn

Banks are not the only option when it comes to business loans. You could also explore the following:

Find out more about other forms of business investment in our guide on how to secure equity investment.