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When setting up a small business it may be necessary to obtain finance to fund start-up costs such as the purchase of machinery, property or advertising materials.

Some of the sources of finance available to a small business are:

• Bank loan - A bank loan is a fixed amount of money that is given to a business by a bank. The loan has to be repaid over time with interest, usually in monthly instalments.
• Personal savings - Money invested in a business by the owner from their own personal funds. This does not need to be paid back.
• Family and friends - Businesses can obtain a loan from family or friends. This may not need to be paid back or might be paid back with little or no interest charges.
• Grant - A grant is a fixed amount of money usually awarded by the government. Grants are given to a business on the condition that they meet certain criteria such as providing jobs in areas of high unemployment. Grants do not need to be paid back.
• Bank overdraft - A bank overdraft is a facility that will allow you to withdraw more money from your account than is available. Bank overdrafts can be easier to obtain than a bank loan.
• Mortgage - A sum of money borrowed from the bank that is secured against a property and paid back in instalments usually over a long period of time.
• Venture capital - Venture capitalists provide money, advice and professional expertise to a business. Venture capital is usually used when there is an element of risk with the business.