How to get finance for your
business – without a proven track record

How to get finance for your
business – without a proven track record

Even the biggest businesses had to start somewhere. And very few had their funding all sewn up from day one. Without a track record they would have needed to prove themselves to investors in order to grow.

You don’t have to be Jeff Bezos or Walt Disney to be familiar with that situation. Getting a business off the ground can be hard enough and may be harder still when you don’t have a past performance or proof of concept that you can point to when looking for funding.

And when it comes to most forms of debt finance, lenders usually want to see a track record as part of their credit assessment criteria.

If you want to apply for an Overdraft, for instance, you may need to have good personal and business credit history to prove you’re a reliable borrower, and you may need to provide an asset such as property as security.

Lenders may even require you to have been their customer for a significant period of time, with a minimum set of accounts filed.

Many equity finance types tend to focus on established businesses too. Private Equity, Venture Capital and Expansion Capital firms tend to consider businesses with defined proof points and an engaging story to tell – which may be tricky if you’re just starting out.

That’s the bad news. The good news is that just because you’ve struggled to obtain finance from a lender because you don’t have a proven track record, doesn’t mean all of your finance options are exhausted.

There are multiple sources of alternative finance that may enable you to access the funding you need, even if you don’t have a proven track record.

Here are some examples of how you can identify and prepare for different finance options that may not put the same level of emphasis on a trading history or track record. This is not an exhaustive list and there will be other forms of finance out there which may be appropriate to your business and the finance you require.

1. Look for an Angel

Your track record may be important to some funders or investors, but potential may also be an important factor. That’s why an Angel Investor could be an option.

Angels invest their own money into a business, in exchange for a minority stake. They tend to be entrepreneurs themselves so should be able to help you spot opportunities and will take pride in helping a business grow from a small seed into a validated, growing and profitable entity.

Working with an Angel Investor will usually mean giving up some control in your business, but you’ll often get their skills, contacts and sector knowledge that could take you to the next level.

There are a few different ways to find one, from attending networking events to searching member directories, so start your journey by seeing if you’re ready for Angel Investment here.

Angels invest £1.5 billion in UK businesses every year.

2. Engage your customers

Maybe you don’t have a clear track record, but you do have a great product. Maybe you’re even starting to build up a loyal customer base, or have a business plan that people have independently told you they believe in.

It might not be enough to get investment or loans using traditional methods, but it might be enough to capture the attention of the general public.

Equity Crowdfunding can help businesses raise funding from multiple investors via a regulated online platform. You could get capital from existing investors, which may be a way to put your business or product in front of a new or interested market.

But it can be a time-consuming process – and it’s far from guaranteed.

You often need a clear business plan to showcase your growth strategy and to target the right platform for your business. Each Crowdfunding platform offers different benefits depending on business age and type, so do your due diligence.

But before you do, find out if Equity Crowdfunding could be for you, and do your research to make sure your business is ready.

“Crowdfunding has given us more than 2,000 supporters and early customers…Securing funding has allowed me to fund an idea I had as a teenager, into a business that is about to transform an industry.”

Yasser Khattak Founder and Chairman @ Den

3. Get a government-backed loan

Though most debt funding will require businesses to fulfil a series of strict eligibility criteria, there are still some options that don’t necessarily require a proven track record or any assets to provide as security.

A is a government-backed personal loan (as opposed to a business loan), worth anything from £500-£25,000, used to start a new business or grow an existing one - provided that the business is less than two years old.

The loan is unsecured, so you don’t have to use your house or any other asset as security to get it, and borrowers make repayments over one to five years at a fixed interest rate of 6% per annum.

Start Up loans support most business types and recipients will also be entitled to 12 months of free mentoring. You can find out more about the loan via the Start Up Loans Company website.

Want to explore finance options for your business?

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What do Apple, Amazon, Disney, Google, Mattel and Harley-Davidson all have in common?

They’re all multinational businesses that originally started life in a garage.