Entrepreneurs advised to explore alternative funding options

Smaller entrepreneurs are being advised to explore the alternative funding options when setting up or growing a business.

With some entrepreneurs still struggling to access traditional forms of finance, John De Groot, chairman at Success Strategy, suggests that business owners consider turning to family and friends to help fund their venture.
He explained that securing a traditional loan is highly dependent on a number of factors, including: the basic viability of the idea; the amount of money required and of course how much the entrepreneur can contribute; the naivety or experience of the entrepreneur - including their peer group; the credit rating of the individual; and the ability of the entrepreneur to motivate the case.

'There is still money from specialised sources for the big ideas or the technology ideas. But, for smaller entrepreneurs, self-funding or money from friends and family are routes that should be sought,' he said.
However, if you are able to secure loans from personal sources such as friends and family, you should ensure that any arrangements are formally agreed and legally binding. You might want to consider the impact on familial relations as well.

Latest figures from the Bank of England suggest that lending to small and medium-sized firms fell to - 2% in February, despite the banks being told to make more money available.

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