Entrepreneurs are going to be the engine of the UK’s economic resurgence. But to do so they need investors to back them.
For most entrepreneurs, the first port of call is the lending bank. But they’re wrong – banks aren’t right for those with few assets: they’re either reluctant to offer loans in the first place, or doling them out at such unfair terms as to make the whole exercise pointless.
And what’s more, with the banks are lending less, not more, young business owners are being forced to look elsewhere for the finance they need. This, to my mind, is the best thing that could be happening. It’s high time startups in the UK got out of the mindset whereby if they can’t get a loan from the bank, they give up and go home.
Because in fact today’s start-ups are met with an abundance of alternative – and better-suited – forms of finance. From peer-to-peer lending to invoice trading, these innovative businesses provide today’s start-ups with the means of raising cash, without incurring the crippling rates of interest commanded by our banks.
Angel investment is also a serious alternative for entrepreneurs seeking business finance, and comes with a host of associated benefits compared to the bank loan.
As well as escaping the potentially lethal debt-trap, business owners who secure the backing of an angel can also bag the expertise of an individual committed to helping grow their business, with the wisdom and experience to make a real contribution.
For new business owners, the advice of someone who has been there and done it all before can be worth every bit as much as the cheque which guarantees the first stock order.
Entrepreneurs seeking an angel have chosen the right time to look. Under the government’s Seed Enterprise Investment Scheme (SEIS), tax relief of up to 78% is on offer for investments in young startups.
By targeting its incentive on investment in businesses less than two-years old, with a maximum of 25 staff and £200,000 in gross assets, SEIS is aiming to drive funding to the startups that need it most.
It’s one of the most radical tax gambits in the UK’s history, and something I’m fully committed to supporting. My belief is that it not only helps open doors for business owners seeking finance, but also offers a whole new group of people who have never considered business investment before the chance to try their hand at being angels.
With the support of these prospective angels and alternative forms of finance, British business owners need not worry about having their wings clipped by recalcitrant bank lenders.
Find out more about GrowthAccelerator’s access to finance support for high growth businesses.
GrowthAccelerator is sponsoring Windows of Opportunity, a series of free events to inform entrepreneurs, businesses and investors about the new types of money and new investment opportunities that exist today.