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Business Funding UK - The UK's most comprehensive directory of business funding websites and other links

SOURCES of Funding Questions Answered

Q

What is a Credit Rating and how do I find out what mine is?

A credit rating is based on a scoring system of who you are, your age and marital status, whether you own your own home, the area you live in and whether you have any County Court Judgements. By assessing these facts and assigning you a score, lenders can determine what your potetial risk is and whether you are likely to pay off the loan.

Fo a general guide to your credit rating click on the link http://www.checkmyfile.com/ Please note you will have to regoster with them but this is free. If you wish to have a more precise credit score and gain access to your personal files then a small charge may be involved

Q

What Grants are available for new start and existing businesses?

Depending on the type of business you have, where it is located, how long it has been trading, how old the owners are, etc. There may be a number of different grants that you could qualify for. We do not hold a database of all of these grants. However. if you click on the link above then you can register on the J4B.co.uk Web Site and carry out a free search for all Grants applicable to your particular business and area, etc. The service is free and very comprehensive.

Q

I've Heard of a SMART AWARD, What is it?

Smart is the SBS initiative that provides grants to help individuals and small and medium-sized businesses to make better use of technology and to develop technologically innovative products and processes.

The following help is available in England (Scotland, Wales and Northern Ireland have their own initiatives) -

Technology Reviews

Grants of up to £2,500 for individuals and small and medium-sized firms (those with fewer than 250 employees) towards the costs of expert reviews against best practice.

Technology Studies

Grants of up to £5,000 for individuals and small and medium-sized firms (fewer than 250 employees) to help identify technological opportunities leading to innovative products and processes.

Micro Projects

Grants of up to £10,000 to help individuals and micro-firms (fewer than 10 employees) with developing low-cost prototypes of products and processes involving technical advances and/or novelty.

Feasibility Studies

Grants of up to £45,000 for individuals and small firms (fewer than 50 employees) undertaking feasibility studies into innovative technologies.

Development Projects

Grants of up to £150,000 for small and medium-sized firms (fewer than 250 employees) undertaking development projects.

Exceptional Development Projects

Also for small and medium-sized firms (fewer than 250 employees), a small number of exceptional high cost development projects may attract grants of up to £450,000.

Q

What is an Enterprise Grant?

An Enterprise Grant is a once and for all form of financial assistance for SMEs investing in projects in the Enterprise Grant Areas of the English Regions, that would not otherwise go ahead.

Enterprise Grants complement the availability of commercial funds in helping firms to finance their growth. To ensure that adequate commercial finance is available in Enterprise Grant Areas and other areas of England, the Government has introduced the Enterprise Fund (see "Other possible sources of assistance to Industry in England" for further details).

Applicants should note that Enterprise Grant is discretionary and that there will be some necessary selection of higher quality projects (see Quality section). Please check with your GO for details of its particular selection processes and criteria for Enterprise Grant projects (these may vary between regions). Each GO will be allocated a budget for Enterprise Grant in its Region and will decide on the selection criteria and processes to use in allocating that budget.

Q

What are Enterprise Grant Areas?

Enterprise Grant Areas are those parts of the English Regions where Enterprise Grant may be awarded under European Commission rules. The map (click here) shows where these Areas occur.

Small enterprises can receive grant up to 15% gross of fixed capital costs. Medium-sized enterprises receive up to 7.5% gross of fixed capital costs but may receive up to 15% gross in the Assisted Areas (contact your Government Office for details of the Assisted Areas).

Q

What other forms of Investment could there be for new start business?

A

There are a variety of Organisations and Individuals who may be interested in investing in a sound business opportunity, these include:

Venture Capital

Venture capital in the UK originated over 300 years ago, when the wealthy were approached by individuals with ideas, to back their projects. Today there are many British venture capital firms, and a similar number of foreign firms, together offering billions of pounds of private equity to entrepreneurs every year.

Venture capital can help you achieve your ambitions for your company and provide a stable base for strategic decision making. VCs will seek to increase a company's value to its owners, without taking day-to-day management control. Although you may end up with a smaller percentage ownership, within a few years your percentage should be worth considerably more than the original "Full Monty".

VCs usually look to recoup more than their investment in three and five years. Some will concentrate on £100m-plus deals; some on much smaller deals; some invest only in particular sectors. Other, generally larger,

VCs adopt a more general approach to investment, although they will commonly have teams with a sector focus, and can bring a broader commercial perspective.

Business Angels

it is often easier to raise £20m than it is to raise £250,000. As any small business knows, banks and venture capitalists will not lend the relatively small amounts of cash required to see businesses through the early stages of their development. Either the amounts involved are just not worth the time and trouble, or the risk is regarded as being too great. But, in the shape of a Business Angel, help may be at hand. Though their name appears altruistic, these people have the desire to make money and the urge to use their experience to help a business improve.

Angels are often experienced and successful business people who have an idea of what will work and what will not. They assist businesses by investing their time and effort in a business as well as putting in cash. They are often entrepreneurs who have £50,000 to £1m to spend and want to combine their investment with hands-on support.

The addition of an Angel to the team, someone who can impart good business advice, may be the deciding factor in the success or failure of your business idea.

VCTs

Venture Capital Trusts (VCTs) provide much of the start-up finance for hi-tech, biotech and Internet stocks but also for traditional manufacturing businesses, management buyouts etc.

VCT shares must be held for at least five years to retain initial income tax relief, or it is clawed back by the taxman so it should be seen as a long term investment. However, the freedom from tax on dividends and from capital gains tax on profits is unlimited - even if you buy in the market after launch.

CVCs

Many public companies have had either a venture fund or business development group for strategic alliances and acquisitions, but increasingly major corporations such as Sun Microsystems, Reuters, Unilever and various professional services groups have set up their own funds to invest in early-stage and start-up companies.

Generally the venture arm of a public company will only invest "behind" a venture capitalist, leaving the due diligence and active management involvement to the VC.

There is an excellent Database of possible Funding providers available from UKLive at

www.uklive.net/search/main1.htm

British Venture Capital Association

The BVCA represents the vast majority of venture capital and private equity in the UK and is dedicated to promoting the industry for the benefit of entrepreneurs, investors, its practitioners and the economy as a whole. Their web site may be accessed by clicking here

www.bvca.co.uk/