Funding
Your Business - Business Finance
About
Funding Your Business
Borrowing
money tax efficiently
When your business needs to borrow money consider borrowing in a
way that reduces your overall tax bill. Tax relief on borrowings
is not sufficiently exploited by some businesses. Tax
relief may offset the costs of some types of borrowing but not all
types. Careful consideration must be made of the implications of
all business borrowing.
Loans and overdrafts
When you start your business, you may need to borrow money to cover
your day-to-day expenses until you start to make a profit, or for
initial costs like buying equipment or a premises.
There
are many different sources of borrowing when starting or growing
a business. There are many advantages and disadvantages of loans
and overdrafts these are two of the most popular sources of start-up
funding. There are other options available from high street banks
and building societies and some companies offer unsecured loans.
Specialist loans are also available for Muslim business owners where
the payment of interest is prohibited. Some lenders may need a loan
guarantee before they will give you a loan. A loan guarantee ensures
that they will get their money back even if the business fails.
Borrowing Money from Family and Friends
It's common for owners of small business and start ups to look to
the Family and Friends for support when they need additional business
funding.
The
result can be just what is needed, but often these arrangements
are informal and based just on trust and verbal assurances and can
sometimes go very wrong. It's always a good idea to come to a businesslike
arrangement with a formal written agreement in order to avoid any
potential pitfalls.
Commercial mortgages and brokers
Buying commercial premises can be a very good investment. Owning
a property gives your business stability, and the property itself
can become a significant asset. Or you may be buying a business
that is tied into the property like a hotel, public house or care
home.
If
you decide to buy premises you will probably need to consider taking
out a commercial mortgage. Mortgages are normally for 15 years or
more and the property itself is always at risk if payments are not
made on time.
Commercial
mortgages can be used for a variety of purposes:
- purchase
of business premises
- expansion
- residential
and commercial investment
- property
development
Banks
and building societies offer commercial mortgages. But you must
satisfy the lending criteria. Some lenders may accept applications
where there is an adverse credit history, but most lenders require
a positive personal credit rating and clear evidence that your business
is creditworthy.
It
also depends on your business circumstances at the time and the
long-term projections for your business. Some lenders impose restrictions
on the uses of commercial premises. Some business concerns may be
excluded altogether.
List
of Business Finance Providers
OCIS
provide general financial information, we urge you to consult an
Independent
Financial Adviser ( IFA )
before making any important decisions about your finances. |
