No revenue, but need business finance?

Here's the dilemma: you've got a great product or service idea, you're willing to commit blood, sweat, tears and even your own life-savings to it, but you still need more money to get your idea to market.

Who's going to lend you money when you have no revenue?

Well it's unlikely to be a High Street bank or other traditional lender.

All is not lost though, because there are different options available to you.

The first is finding somebody who will give you the cash in return for a share in the business, namely an investor (nb. if you were hoping for something more insightful, stay to the end). Investment can come from many sources, including friends and family, private investors - often known as business angels, venture capital firms and, nowadays, equity crowdfunding.

There are pros and cons to all of these approaches and these are covered at length in other articles on the web, so I won't go into detail here other than to sum it up with one of my favourite quotes "equity is the most expensive money you will ever acquire if you are successful, and the cheapest if you fail". Keep that in mind!

The second is to look for grants or other government funds. These are often administered regionally by local enterprise partnerships, or LEPS. If you don't know where yours is, a quick online search for "LEP + [your county]" should find you the answer.

Finally, there is debt, and while this isn't the domain of the High Street banks, there are lenders out there which specialise in supporting pre-revenue businesses with the potential to succeed. Their credit assessments are forward-looking rather than centred on previous trading history and they take a different view on security too. As well as term loans, they might be able to bridge your receipt of grant monies, the next funding round or R&D tax credits, which can be helpful if there is a time delay in these coming through. Loans start at around £25,000 and can be as high as £2m.

The great advantage of debt is that you don't have to dilute your shareholding in order to get hold of the money you need. My favourite quote applies!

So, if you are an early stage business with the commitment and potential to succeed, don't despair. Our regional finance specialists can help you find and apply to the right funder for your needs.

No revenue, but need business finance?

By: Neil Edwards

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