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Loans

LoansThere canare bemany usedways to startobtain orfinance growfor a company. AsThe amain company,ones youare:

• loans
• selling canshares applyin foryour company
• funding

Loans

A loan is money that a start-upcompany loanborrows fromand themust government.

Directorsbe paid back, usually with interest. Loans can alsobe takeprovided loansby fromindividuals, theirbanks, companiespublic assector wellorganisations asor lendothers. moneyCompanies may use loans to thatstart company.or grow.  

Before you borrowor money,the youcompany shouldtake out a loan, think carefully about what the money iswill be used for and if youthe company will be able to payrepay it. If the company cannot repay the loan the lender may ask the court to close it back.down, or take other action to recover the money. 

EvenAs ifa yourdirector companyyou ismay forcedbe intoasked liquidation,to give a personal guarantee for a loan taken out by the company.

If you maypersonally havelend money to repayyour company and charge interest, you must comply with the tax rules. You must record any money you lend to the company in your director’s loansloan youaccount.

Selling took,shares in your company

Equity financing is a way of raising money by selling shares in your company to payexisting backshareholders creditors.or new investors.

CheckThis howdoes taxnot isalways paidmean ongiving director’sup loans.control of the company, as investors may own only a small proportion of the shares.

Find out more about equity financing.

Funding

There is a range of government-backed funding and financing options for small and medium-sized enterprises (SMEs).

More aboutSome loans

Start-upschemes loans:

• loanare fromavailable theto governmentall ofbusinesses, betweenwhile £500others andare £25,000
• theonly loanavailable isin unsecuredcertain soindustries involvesor ageographic creditregions.  

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