Alternative ways to finance your business
Bank loans are hard to come by so entrepreneurs are now looking elsewhere, writes Louise McBride
Published 04/09/2011 | 05:00
If you can't borrow money from your bank to keep your business going or to set up a new business, there are other ways to get your hands on money.
If you are about to start your own business and are manufacturing a product which you are producing yourself, you may get a grant from your local enterprise or county enterprise board.
"If producing your own bakery, craft or knitwear, you might qualify for a grant," said Eibhlín Curley, assistant chief executive of the Dublin City Enterprise Board (DCEB). Projects which attract international tourists could also qualify as could software or internet businesses that specialise in animation for customers outside of Ireland, according to Ms Curley.
"The amount of money you can raise from an enterprise board is based on the number of new people you are employing," she added.
"If you're getting a grant from DCEB, you will generally get between €5,000 and €7,000 for each person hired. So if you're hiring two people, you'll usually get a grant of between €10,000 and €15,000."
The type of financial support you'll typically get from an enterprise board include grants for feasibility studies, which tell you whether your business idea stacks up or not, a priming grant for businesses that are less than a year-and-a-half old, and a business development or expansion grant for businesses that are older than 18 months.
A priming grant can be used to cover costs such as salaries, marketing, website development, trade fairs, rental accommodation and certain consultant fees.
About a third of the priming grant is refundable, while two-thirds of the development or expansion grant is refundable.
"The average feasibility study from DCEB is €7,000; the average business priming grant is between €10,000 and €15,000; the average business development grant is €20,000, if you're employing two or three people," said Ms Curley.
The average grants offered by other city or county enterprises varies.
However, not all businesses qualify for financial support from enterprise boards.
"Because it's taxpayers' money we're putting in, we want to know that a business is viable and around for the long haul," Ms Curley said.
For more information, visit: www.enterpriseboards.ie.
If you are a long-time Credit Union member and you are self-employed or have a small business, your Credit Union may be more inclined to offer you a loan than your bank.
"Business loans are not considered part of the Credit Union core business," said a spokeswoman for the Irish League of Credit Unions (ILCU).
"However, on some occasions, a Credit Union may offer small loans to individuals to assist with business purposes."
If your business has the potential to export something or is employing more than ten people, you may qualify for a grant from Enterprise Ireland (EI). Although some of these grants are available for start-up companies, other grants are available for established businesses.
If you have a start-up business which could generate sales of €1m a year and hire 10 or more people over the next three to four years, you could qualify for a High Potential Start-Up Feasibility Study Grant of up to €15,000.
EI also has a Competitive Start Fund for start-up companies, which offers funding of up to €50,000 in return for a 10 per cent equity stake in the company. The Competitive Start Fund will be open for new applications in the second half of September.
To qualify for funding, you must be a manufacturing company or trade your services outside Ireland. You must also have either traded before or have just recently started to trade, and be able to create 10 Irish jobs and generate sales of €1m within three to four years of starting up.
If your business has already been set up, you may get EI funding of up to €150,000 to take on new staff. You will only qualify for this funding -- known as EI's Job Expansion Fund -- if you have been trading for at least two years and have hired 10 or more full-time employees.
For more information on EI grants and funding, visit: www.enterprise-ireland.com.
You may be able to raise money for your company from a business angel -- usually a former entrepreneur who gets a stake in your company in return for his investment. A business angel could invest between €25,000 and €250,000 in a start-up -- but that investment could be higher if a group of them come together.
Sunday Indo Business