by Alistair Blair - Tuesday, 4th September 2007

Then the only problem will be deciding which yacht to buy. in the meantime, there’s a money monster under your bed. It’s your business, and it needs cash now. Let’s go get some.

1 Friends & family

Almost always, the first stop has to be your mum and dad. In the case of sisters and brothers, sibling rivalry may intervene, but the maiden aunt who thought the sun shone out of you aged four: she’s high on the list. Try your college friends. Try your colleague friends.

Why do these sources top the list? Because they know you well and if they are not an easy hit, you should ask yourself whether you are doing the right thing. Because although you will have to promise them a return of some kind, they won’t extract interest from your account every month. A word of advice: don’t take more than you should, even if it’s offered.

2 Overdraft

Now come the obvious mainstream sources— as in banks and finance companies. We reckon there are six ways to get money from banks, and at least 60 providers of most of these financial services. You won’t get meaningful amounts from any of them without providing security, "because you might not pay it back."

Overdrafts aren’t always the cheapest form of business finance, but they are the most flexible. Enough said.

3 Business mortgage

We can also cover this one briefly. Similar to a domestic mortgage, and therefore requires a property.

4 Invoice discounting

...and its close relation, factoring. Imagine all your customers paid cash on delivery. Would that produce the money you need? Your accounts receivable (also known as the invoices you have sent out and are waiting to be paid) should be an excellent form of security.

Dozens of companies will lend against them at reasonable rates. At somewhat less reasonable rates, they will even buy them from you (which means they take the risk of non-payment).

If your business involves exporting goods (but not services) from the UK, you should certainly be abreast of "forfeiting", which is cross-border invoice discounting. Have a look at www.londonforfaiting.com.

5 Stock finance
Got any stock worth nicking? Is it in reasonably large and readily encashable units? Then someone will lend against it. Whisky distillers and car traders: queue here.

6 Leasing
This time, the money is secured on a single asset: most obviously, a car or computers. But a keen salesman will lease you virtually anything. Cast an eye around your premises: can you see anything readily saleable worth £10,000?

You could sell that and lease it back quite expensively (if you need the cash now). For £50,000? Ditto, less expensively. Printing presses: heavy, expensive, barely profitable... but loved by lessors.

7 Bank loans

Banks often prefer loans to overdrafts, because they have a known lifetime and your ability to make the repayments can be readily monitored.

If your business lacks readily saleable invoices, stock or assets but nevertheless has good cashflow, you ought to be able to get a modest loan for the price of a director’s guarantee. Flakier propositions won’t raise a serious loan, however, without some kind of security.

8 Go vernment loan guarantee scheme

No cashflow and no security? If your business is fewer than five years old and your sales are under £5.6m, don’t give up. Six thousand businesses a year get a bank loan guaranteed by the DTI under the Small Firms Loan Guarantee Scheme. The maximum is £250,000. The guarantee incurs a DTI fee of two per cent, and only applies to 75 per cent of the loan—so your bank may require you to guarantee the balance. You can’t apply without a sponsoring bank, so will need a decent business plan. Find a list of participating banks at businesslink.gov.uk.

9 Angels

If you need more than a repayable facility, or you cannot get one (which is basically the same thing), and if your proposition is serious, then you probably need to sell shares in your business. Here, there are five main channels. Expect them all to want a generous slice of the cake..

Angels are top of the list. They’re like friends and family, but further afield-a prime qualification is that they actually have some serious money.

Your prime qualification to get into this market is to get your business approved under the Enterprise Investment Scheme (type that into the Inland Revenue web site), which will enable your angels to get 20 per cent tax relief on their investment.

Think of finding one or a few individuals who have expertise in your business area and might put up £5,000 to £100,000 per ticket. Think of an angel as a director.

Think too, of creating a spectacular business plan, because angels will be much more sophisticated critics of your business than any bank manager.

In most regions, angels are local: pump "angel" and your region into Google and you should find the organisation you need. Some have a sector bias, however.

You’ll have to jump through some hoops to get your tenminute pitch to live angels. But once you’re there, they won’t be as rude to you as they are in Dragons’ Den... in fact, they might say nothing at all.

You might be tempted by one of the freelance or other advisers holding themselves out to you - with varying degrees of sincerity - as a bridge to angel finance.

At best, you’ll succeed and they’ll cost you a pretty penny. At worst, they’ll view you as a marginal case - fodder, in other words, for upfront fees. Always try to make a direct presentation to angels before you pay a sou to an adviser.

10 Venture Capital

The posh name change (they mostly call themselves private equity houses) reflects a move away from startups, and some of the deals are huge buyouts (like a $20m bid for NTL), but in this burgeoning market, there’s no shortage of players queuing up to find the next Skype, Innocent or bid-up tv. You may want to approach them through your accountant or an adviser. But there are so many to go at, why not try a few direct approaches anyway? Also worth noting are venture capital trusts: in the first four months of 2006, VCTs pulled in a record £700m, although a big chunk of that will go into AIM companies. See bvca.co.uk.

11 Regional Venture Capital Funds

England has nine government-backed regional venture capital funds. Wales, Scotland and Northern Ireland have similar schemes. They are small and very selective, but once you’ve done your business plan, a copy should hit your RVCF, again via an intermediary. See sbs.gov.uk.

12 Mezzanine

This is a pretty specialist item. It’s the layer of money between equity and bank loans - both in terms of risk to the financier and expense to you. Typically it’s used in a management buyout. If you need it, you’ll be offered it, but don’t waste time looking for it yourself.

13 float

Listing isn’t just for big companies. AIM, the kid brother of the London Stock Market, is a red-hot joint for small, mid-size and increasingly large players (£33.4bn has been raised, for 1560 companies, since its 1995 launch), with fees from £300,000 to £1m, plus a cut (of the money raised) for the broker.

If you fancy a cheaper, less regulated alternative, take a shufty at Plus – as Ofex has been rebranded, where 800 firms are currently traded. Floating will cost £50-£200,000. In both cases, fees will be rolled into your fundraising. Warning: whinging shareholders.

14 Merge with a rival

Does your business have a good reputation? Do you personally have a bit of a track record? These will stand you in good stead if there happens to be a rival operation with which you could imagine merging.

If they’ve got the money and you need it, "merger" is of course a bit of a euphemism for being taken over. But if you pick the right partner and play your cards right, you might be able to turn the process into a reverse takeover and end up in charge.

15 Accounts payable

If none of the above are realistic or attractive, maybe you should look closer to home. There is a region between being chased to pay your bills and having your credit stopped.

If you need money, you should be in that region, because it is a very cheap source of what you need. Stretching the credit you take from, say, 35 days to 65 days is unlikely to transform your financial situation, but it could be a step in the right direction.

16 Accounts receivable

"Stupid idea," you might think. "I’m already at 80 days!" Moreover, so are your debtors, and in any case, you’ve factored the sales ledger.

Then try a bit of lateral thinking. What can you offer that people would pay for at the point of ordering? Or by direct debit? Are you doing all you could do with Ebay? Plenty of reputable companies use it to sell goods quickly, and not just at 99p either. Think about it!

17 Payroll

Asking staff to forego a spot of pay in return for options is easier at the outset. If the business is going into sound expansion, and everyone is behind you, it may work too. Don’t be greedy. Do be realistic (people are cynical about options, now). They are unlikely to give up more than five or ten per cent and they will need to feel they could get a lot back when the payoff arrives.

18 Raise your prices

Another stupid idea? Think about it!

19 Customers or suppliers

When you deploy the new money, will one of your suppliers feel the benefit? Your customers? If so, and if you are an important or simply a profitable trading partner for them, you should consider asking them to chip in.

Of course, you will have to give something up, like a chunk of equity, or committing yourself to a single source of supply. But if you can get trade sources excited about what you propose, they could be a cheap financing option.

20 Second mortgage

Dead straightforward. Your other half may not agree.

21 Credit cards

It used to be possible to get 20 or more credit cards before the new offers started to dry up. Nowadays the credit card companies are a bit smarter about swapping information, so the potential has slimmed.

Nevertheless, if you have a good credit rating (see experian.co.uk) and have earned a salary of £50,000 or more in the recent past, you ought to be able to assemble at least £70,000 of permanent low interest loans by recycling balance transfers around £100,000 worth of credit card facilities. But never, ever, simultaneously use any of these cards for normal purchases: they’ll shaft you.

22 Downsize

If you believe in your future, invest in it. Spend less.

23 SIPPS

Entrepreneurs with serious pension savings, who are not in a good scheme run by a previous employer, should switch those savings into a Self Invested Personal Pension Scheme.

Basic SIPPS just offer conventional savings methods, but sophisticated SIPPS (eg suffolklife.co.uk) allow you to invest in certain kinds of property, possibly including your business property. That might free up borrowing capacity elsewhere on your company’s borrowing spectrum.

24 The generous payoff

If you’re still in employment but considering how not to be, make sure the circumstances of your departure are such as to maximise the payoff. You knew that already, didn’t you?

25 Regional finance

Setting up shop in Doncaster? In Shotton? In Cornwall? Where mines or steel works have closed, or in areas recognised by the EU as deprived, you might qualify for regional assistance including equity and grants. The EU packages are being re-jigged from January 2007, so get your skates on: dti.gov.uk.

26 Industry grants

Dealing with grant-giving bodies can be tiresome. Nevertheless, all sorts of industries and investment projects, especially small companies developing high technology or based in sub-average economic areas, qualify for grants. Contact your Business Link and look at j4bgrants. co.uk. Or read Real Business’s Free Cash column.

27 Ponzi Scheme

Here’s one we don’t recommend. In 1919, Charles Ponzi, an Italian immigrant to America, launched a business offering depositors returns of 100 per cent in 90 days.

The idea was to convert international postal coupons, printed at his behest in corrupt countries, into US stamps under international postal treaties. Depositors flocked in, but Ponzi never bought any coupons.

He simply redeemed early depositors with the proceeds from new depositors, amassing several million dollars before he came unstuck.

The scheme is still copied regularly, most recently in the UK by Michael Summers, whose Secure Investment Programme cleared an estimated £7m between 1997 and 2004. He commenced a four-year stretch last month. And you thought raising finance was tough.

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