Step 4: Funding

Funding for business start-ups can be difficult to find, but with a little research it is not impossible.

The Arts Council have awarded successful appilcants with grants for items such as equipment, travel, research and promotional materials. However the grant culture is not suitable to the nature of enterprise, as business is about making money. Often free money is very handy, but only if it leads to successful economic activities. This is why you need to write a business plan to demonstrate how investment will generate profits.

Enterprise is supported either by loans, with the idea that the lender is paid back with interest or by ‘crowdfunding’ websites such as Kickstarter, Indiegogo or Go Fund Me where people invest for fun or in return for a service, product or experience. For creators who cannot enter in to such arrangements there are loan providers in London that comply with Sharia Law, such as The Islamic Bank of Britain and most Credit Unions. If opting to give crowdfunding a go make sure you read the website’s eligibility and Terms and Conditions, the host will require between 3% and 7% of funds raised, you might for some crowdfunding websites have to be a limited company, and remember when you send in your pitch it has to be reviewed before it goes live, this might take a couple or days or even week before it is uploaded to the host website. Avoid taking out bank or credit agency loans to avoid debt early on in the business's life unless absolutely necessary. If need be, use savings or ask family for support. If your family can assist you, try to make a formal arrangement to repay them within a set time-period. It must be clear whether the money is a gift or if they expect to be paid back! However, borrowing from family members may not be an option. Look over the rest of this section for other ideas.

You can start a business up from scratch using almost any amount of savings. It is advisable to have at least £1,500-£4,000 in the bank before you launch your business. When you first start trading you may find you don't make very much money as all you profits are going into promotion, equipment, tools or other start-up costs. Do not underestimate how expensive setting up a business can be; it is not unusual for sole traders and partnerships to make tiny or no profits for the first few years, see the Funding section for more details and links.

There are several options open to you. After opening a business account at a bank you could apply for a business loan, you will need a business plan and indicate you will be investing money also. It is advisable to use their business planning software rather than your own version. You could approach your local Credit Union instead. These are community banking schemes that can offer low interest loans (3-6%) for a few months or years. You can find out where your nearest Credit Union is through your local enterprise agency or check with the ABCUL (Association of British Credit Unions) . If your application is rejected then contact your local enterprise agency.

Artquest provides lists of wide ranging loans and grants withing the Funding section. Cross-reference these to Opportunities, specifically the Deadlines section.

 

 

Alison Branagan (© 2002)

This article is from the Artlaw Archive of Henry Lydiate's columns published in Art Monthly since 1976, and may contain out of date material.
The article is for information only, and not for the purpose of providing legal advice.
Readers should consult a solicitor for legal advice on specific matters. Artists can get free online legal information from Artquest.