Getting funding to grow your business
If you want to grow your business, you are likely to need funds to finance your expansion plans. Our corporate finance solicitors can help you through the funding process, making sure that lenders get the necessary level of security, that borrowers’ obtain financial terms that are reasonable, and that good lender/borrower relationships are maintained.
There are more options available for raising capital than there used to be. You can choose which works for you, depending on the circumstances of your business and how much you need to raise.
Types of funding broadly fall into two categories:
- Debt – allows businesses to borrow money that is then repaid over an agreed timeframe with the addition of interest, but full control of the business is retained. Examples include:
- Bank funding
- Alternative funding
- Equity – when you raise money by selling shares in your business, either to your existing shareholders or to a new investor. While this doesn’t mean you surrender control of your business, investors do take a stake in exchange for their investment. Examples include:
- Seed Enterprise Investment Scheme ( SEIS ) are government approved schemes that offers tax benefits to investors in return for investment in small and early stage start-up businesses in the UK.
- Crowd funding – most often used by start-up companies or growing businesses enables businesses to raise money from a large number of people via online platforms.
- Angel investing – in exchange for ownership equity in the business a high-net-worth individual provides financial backing for small start-ups or entrepreneurs.
- The Enterprise Investment Scheme (EIS) offers tax reliefs to individual investors who buy new shares in a company. Under EIS , you can raise up to £5 million each year, and a maximum of £12 million in your company’s lifetime.
- Private equity – uses funds to invest in private companies or buy out public companies.
Next steps: get in touch
If you need legal advice on the pros and cons of the range of finance products available, contact our team of investment solicitors on: 0800 533 5349 or email@example.com
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Frequently asked questions
Venture capital (VC) is a type of private equity where capital is invested in exchange for equity (typically a minority stake) in a business that appears to be about to take off significantly. People who make these types of investments are called venture capitalists.
Crowdfunding is a way of sourcing the cash needed to finance a new business. It’s done by collecting small amounts of capital from a large number of people. There are different types of crowdfunding. Investors can either donate money without getting a return, or receive rewards, such as equity in the company that raised the money.