Different sources of finance avialable to a business start-up

• LOANS-  longer-term kind of finance, fixed period over which the loan is provided (e.g. 5 years), the rate of interest and the timing and amount of repayments.  good for financing investment in fixed assets  and are generally at a lower rate of interest that a bank overdraft.  However, they don’t provide much flexibility.

• SPONSORSHIP hard to get
• GOVERNMENT GRANDS hard to get 
• PERSONAL SAVINGS e.g redundancy money risky This is a cheap form of finance and it is readily available.   Investing personal savings maximises the control the entrepreneur keeps over the business.  It is also a strong signal of commitment to outside investors or providers of finance.
• RE-MORTGAGING- The way this works is simple.  The entrepreneur takes out a second or larger mortgage on a private property and then invests some or all of this money into the business.  The use of mortgaging like this provides access to relatively low-cost finance, although the risk is that, if the business fails, then the property will be lost too. .
•  INVESTORS may decide to pull out, hard to find 
• DEBENTURES 
• FRIEND/FAMILY e.g inheritance -  This can be quicker and cheaper to arrange (certainly compared with a standard bank loan) and the interest and repayment terms may be more flexible than a bank loan.  However, borrowing in this way can add to the stress faced by an entrepreneur, particularly if the business gets into difficulties.
• SALE OF ASSETS 
• SALE AND LEASEBACK 
• OVERDRAFT-is a more short-term kind of finance. An overdraft is really a loan facility – the bank lets the business “owe it money” when the bank balance goes below zero, in return for charging a high rate of interest. As a result, an overdraft is a flexible source of finance, in the sense that it is only used when needed. Bank overdrafts are excellent for helping a business handle seasonal fluctuations in cash flow or when the business runs into short-term cash flow problems (e.g. a major customer fails to pay on time).