Nothing is more exhilarating for an entrepreneur than the idea and dream of starting a prosperous business. Nothing is also more frustrating for an entrepreneur than working out the numbers that will make that idea happen.

As any entrepreneur will tell you, one of the hardest parts of getting a start-up from idea to operational is funding the thing. You can very quickly burn through initial capital, and before long, you can find yourself personally funding it. Following, we will go through your options and answer some of the burning questions you likely have about start-up financing.

Start-up financing

Start-up financing offers a solution. It’ll get you off the ground, pay for operations over a term defined by your own budget and help you get through the hardest stage of a start-up – the first year. All you’ve to do is come around to the idea of borrowing through a loan which is possible even for inexperienced entrepreneurs.

What is a start-up loan?

A start-up loan is a sum of money lent to you to get your business going. Financial institutions such as banks and independent lenders are the most reliable sources of such funding. Some of these institutions specialise in lending to start-ups. This is important since most new start-ups lack the credit history to take out a traditional loan.

How much can I borrow?

You could borrow anywhere from £10k to £500k. The amount you can borrow depends on your credit score, business plan, cash flow forecast and in the case of lenders who review applications in person, you. Lenders want to see director responsibility, good numbers and potential in a start-up. These offer reassurance to the lender that the amount borrowed will be paid back with interest.

What niches can borrow?

So long as your start-up has a sound business plan and forecast, it doesn’t matter what niche or market it will operate in. From bakeries to haulage firms, everybody is welcome to apply for a business loan. Some lenders also specialise in start-up financing by sector. These are worth going after for their experience alone.

Is financing right for my start-up?

This is the most important question, and it depends on your needs. A start-up loan has the practical advantage of offering predetermined monthly payments. You will also only have the expectations of the lender to meet - and their only expectation is you pay them back with interest. The disadvantage to a start-up loan is it doesn’t come with the expertise that an outside investor would bring.

What’s the difference between secured and unsecured funding?

Secured funding is borrowed against an asset you own. Unsecured funding is borrowed without the security of an asset. Both types of funding are available for start-ups. The most important thing to remember here is if you default on your secured loan, the lender is legally allowed to seize your secured assets to repay the loan. Most start-ups will opt for an unsecured loan due to the lower risk.