Timeline of a New Business - What funding is available when?

Timeline of a New Business

The single biggest worry that plagues UK startups is funding. This is especially pertinent in a time of increased uncertainty due to COVID-19. However, done carefully and cleverly, there is a way to ensure that sufficient funding is available at every stage of the business. These include various types of loans and business credit-cards. 

But it can all be a bit confusing can’t it?

Well, to help guide you through the maze of funding, we at Business Score have broken down the stages of a startup in order to show you what funding is available and when.

  1. Pre-launch – Crowdfunding and Personal Savings

So, you’ve got a cracking business idea, and you’re raring to go. You just need some cash to get started. 

The best people to finance an idea are those who believe in it. Personal financing is a good way to start a business, and realistically, as the owner of a potentially Very Successful Business, you will need to put some skin in the game. One thing to keep in mind when personal financing is to ensure that debt against personal assets is not taken (like a second mortgage) or a mountain of business expenses on a credit card.

Obviously not everyone has a mountain of cash at their disposal, so another form of funding to consider is crowdfunding. Sites like GoFundMe, CrowdfunderUK, and Kickstarter offer a source of money from others who will only help a business out if they believe in it. Crowdfunding also boasts other positives too like beta-testing opportunities, fostering a loyal customer base, and creating pre-launch hype. Companies like ultra-successful Fintech-startup Revolut used crowdfunding from platforms Seedrs and Crowdcube. Revolut has now expanded globally with over 10 million customers in 35 countries. Could be you!

  1. Launch – Invoice Finance

You’ve taken the plunge and you’ve launched the company. Congratulations! 

Launching is expensive though - there are a lot of one-time costs that perhaps you haven’t budgeted for. What to do?

Invoice financing borrows money via unpaid invoices and unlocks money that you haven’t received yet. Pretty cool, right? It’s akin to a business loan, but invoice finance uses the accounts receivable as an asset. 

In simpler terms, invoice financing allows a business to borrow money based on what customers owe. This type of financing is flexible and available to many businesses. eCommerce can definitely use this type of funding as well - businesses that sell exclusively online have been shown to benefit greatly from invoice financing.

  1. Three months in – Revenue-based Finance

Sales are going well. Your customer base is growing. You may want to try expanding your offering, or reaching out to new customers. But for this you need money. 

Revenue-based finance is similar to a business loan, but is more flexible with repayments. Lenders provide money based on sales and marketing data, with repayments made weekly or monthly with a fixed fee and interest on top. The repayments are taken as an agreed percentage of the business’ revenue, if the month is slow, the business pays less. Revenue-based finance means that a business only pays what it can afford. 

Valant Medical Solution used this method of financing to stimulate growth. It used RBF and venture capital funding to garner a 500% growth rate. 

  1. One Year in – Credit Line and Business Credit Cards, Business Loans, Trade Finance

Happy birthday! Your business is one year old today!

You’ve had a great year, grown steadily, and now - almost as a reward - you are now able to access a whole host of other great funding options. 

Similar to an overdraft, a credit line is a sum of money which acts as a buffer. A business can take from this sum as needed, and pay interest on what they’ve used. However, the money is not renewed once depleted. The lender will typically give credit of up to 10% annual revenue. The costs can range from 7-25% of the buffer, plus a fee for when the business dips into the sum of money. The arrangement can last 6 months - 5 years depending on the agreement. 

A business credit card works similarly to a personal credit card, but with slightly different terms. This can offer unexpected benefits such as the fact that your employees can go out and make purchases on the company card for you. Also you may qualify for rewards such as air-miles too!

Trade finance is a type of working capital where the lender pays for your inventory or stock directly to your supplier. You pay them back when you’ve made your sales. 

And of course, everyone knows about the business loan. A business loan is where lenders will provide a lump sum of money plus an additional set interest rate. The interest rate is the cost of borrowing the funds.

  1. Three+ Years in – All of the Above

This far into a business’ lifespan, it should be eligible for all of the financing above - if it’s doing well! Well done for getting to the 3 year stage - 60% of new UK businesses have failed by this point. 

If your business is doing really well, you may even want to consider looking into equity financing. This is a whole other topic for a whole other article though. 


If you have any questions then do get in touch - we’re always here to chat more. 

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Disclaimer: Business Score helps UK firms access business finance, working directly with businesses and their trusted advisors. We are an introducer and do not provide loans ourselves nor are we FCA accredited. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Business Score may receive a commission or finder’s fee from lenders for making such introductions.
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