For many people, the idea of running their own business is the absolute dream. But for any business, no matter what industry it operates in, patience, organisation and business savvy is required to get up and running. Reports show us that more than half of all SMEs fail and go out of business within the first five years. Securing funding whether a government grant or a business loan is crucial in helping you get set up off to a strong start. If you’re unsure of how to go about this or what the process is, here’s how.

Typically, banks will not offer loans to new start-ups, but they will for businesses that are already established. So in this instance, you’re going to need a government grant. There are many types of grants you can apply for; Direct Grants, Equity finance & Soft Loans - we’ve summarised each for you:

Direct Grants are essentially funds to help you cover start-up essentials, from covering the costs of training, equipment or to help you secure new business. With this approach, you will be expected to provide 50% of the grant up front.

Equity finance grants are there to drive down initial costs and help you get a 50% tax reduction while your company is in its infancy.

Soft Loans are, as you can guess, loans but with better interest rates and terms which can be a very beneficial option for you when you are in the earliest stages of establishing your business.

In order to qualify for a business loan, your company must meet certain criteria before you can apply. For example, for a typical business loan with a UK-based bank will require you to a private ltd company in the UK (excluding Northern Ireland, Channel Islands and the Isle of Man), to have been trading for over 12 months, to not have an annual turnover more than £2 million, and to have no county court judgements or court decrees within the last few years.

Additionally, as the applicant, you need to meet similar requirements. You’ll need to be aged 18 years or older, be a resident in the UK (once again, excluding Northern Ireland, the Channel Islands and the Isle of Man), not be currently bankrupt (goes without saying) and be the authorised person to handle the finances and accounts used to repay the loan.

With a lot of hurdles involved of applying for a business loan, you can help strengthen your application with a comprehensive business plan. This can cover a number of things including an executive summary, a short description of your business, a clear demonstration of the market research you’ve conducted for your sector, what your marketing and sales strategy entails, details on your management team, how the business operates and a financial forecast that covers 3-5 years.

Your forecast is probably one of the areas that will require the most attention for your plan. You’ll need to demonstrate how the investment will benefit your sales, how quickly your sales will grow and when you expect to take a profit. Be realistic in your approach and back it up with the market research you’ve previously provided.