Types of finance

Overdraft:

• For short-term funding and/or working capital.
• Is quick and easy to arrange and very flexible.
• Renewed annually with your bank and is repayable on demand.
• Annual fees plus interest rate.

Asset finance

• To fund purchase of equipment or machinery – also known as Hire Purchase (HP)
• Debt secured against the asset and the interest rate is fixed.
• Monthly payments aid cash flow.
• Finance over the useful life of the asset.
• Can be penalties if you want to repay early.

Loans

• Typically for longer-term finance/start up costs.
• Term of loan is usually fixed giving certainty.
• Option to fix the interest rate too.
• Banks usually ask for security against the debt.

Grants

• Usually non-repayable (provided you comply with the requirements).
• Schemes change frequently.
• Can have very specific requirements.

Crowd Funding

• Based online seeking investment from a large group of people.
• The two main types of crowd funding are equity based and rewards based crowd funding.  
• Equity based crowd funding is selling a share in your business in exchange for an investment, whereas reward based is seeking investment in exchange for a supply of product or future discounts or members.
• Crowd funders often have a higher appetite for risk than traditional financial institutions and as such can be a useful tool for raising capital for a fledgling business.  
• A successful crowd funding campaign can add publicity to a project or venture which can be extremely helpful for the future marketing of a project.   

Other sources of funding might include:

• Business Growth Fund
• Enterprise Finance Guarantee scheme
• Receivables finance