Cash flow is one of the most important parts of any business. Without it, it can be tough to stay afloat, let alone turn a profit. Grants and loans are two options to consider if you're looking for business funding to help maintain a healthy cash flow.
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6-out-of-10 small business owners use their own money to keep things ticking over. But using your own cash to fund your business clearly isn’t sustainable for most people. Instead of dipping into your own pockets, why not look into other business funding options, such as small business grants and small business loans.
And choosing between a grant vs loan is simple if you understand how they work. We’ll cover the differences between them as well as the advantages and disadvantages of each below, so make sure to read on!
A grant is a sum of money given to a small business. Grants can be awarded by:
To get a grant, your business has to meet certain criteria. Before you apply for one, it's best to think about how you would use it, as this can be one of the deciding factors. Businesses are given grants to facilitate their contribution to the economy.
Grants are handy because they give you access to money that you don’t have to repay. However, it's important that you spend this money on whatever you’ve agreed with the lender , or you may end up having to pay it back. This is easy enough to do as long as you track your spending properly.
As long as your lender agrees on the purpose, you can use grants for whatever you see fit; this might be research and development, training employees, or marketing your business. Where you are based (and what you do) can also affect whether you're eligible.
Let's take a look at some of the reasons you may want to apply for a business grant.
But, here are some things you should also keep in mind.
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A business loan is money that a bank or a financial institution lends to you. Like grants, you need to use this money for business purposes, but there are fewer rules stating exactly how you must use the funds once you have them.
Yes. You do have to pay back a business loan, just like you would with a personal loan. How much you're allowed to borrow (and for how long) will depend on the lender. They’ll also set out a repayment plan so you know how much you have to pay back, what your interest rate is, and how frequently you have to pay back.
You can use business loans for most things. This may take the form of buying inventory, marketing, or hiring new workers. You can even use some loans to pay for costs like rent or utilities. Lenders will assess whether you’re eligible for a loan by looking at your credit score.
With an iwoca flexi-loan, you can get up to £1,000,000 whenever you need it - without the paperwork. Apply in just 5 minutes and get your funds as soon as you're approved.
To summarise, here are the key differences between a grant vs loan.
Both grants and loans can do the trick when it comes to keeping cash flow steady. But they're far from the only options available. You may want to check out some alternatives such as:
Line of credit. An extension of a certain amount of credit. You only pay interest on the money you use, and you can access it whenever you please.
Merchant cash advance. Receive a lump sum, which is paid back with a portion of each credit card sale you make.
Business crowdfunding. Raise capital from a large group of people, usually online. This works well if you have an audience that loves your early-stage product.
Don't rush into a decision. If you take the time to weigh up your options, your company will be in a much greater position for long-term success.
Iwoca’s Flexi-Loan provide you with fair and flexible finance without a drawn-out application process. Apply today and see how we can help you grow - it’s what we’re here for.
Cash flow is one of the most important parts of any business. Without it, it can be tough to stay afloat, let alone turn a profit. Grants and loans are two options to consider if you're looking for business funding to help maintain a healthy cash flow.
