A competition offering cash rewards for the most inspiring business ideas have been launched in Glasgow.

Four awards of 20,000, plus three months support worth 5,000, are up for grabs in the 2008-09 Glasgow Business Challenge Fund. Run by Glasgow City Council, the fund is open to small and medium-sized firms from the city (maximum of 250 employees) that have been trading for less than three years.

Interested firms are asked to submit a business plan of no more than 40 pages outlining their entrepreneurial spirit, innovation, and their plans for future growth. Shortlisted finalists will then get to pitch their ideas before a judging panel.

Companies have three chances to enter the competition, with the following deadlines set:

30 October 2008.
30 January 2009.
30 March 2009.

Two winners will be chosen from the October round, with one each from the January and March contests.

The Food Standards Agency (FSA) has awarded grants of nearly a million pounds to help food caterers and food retailers improve food safety. Local authorities will administer the grants of up to �50,000, and will involve community groups, local colleges and a range of other organisations in delivery of support to businesses.

The business grants will help almost 5,000 businesses to implement Safer Food better Business (SFBB) ? an innovative and practical approach that helps small businesses put in place food safety management systems. This year the FSA grants have focussed on those caterers and retailers who are harder to reach. SFBB has been developed by the FSA in partnership with industry and local authorities with specific advice available for different cuisines and groups such as care homes.

Applications for the grants were invited in May and applications were internally appraised and considered by an external appraisal panel on 7 August. The panel had representatives from local authorities, LACORS (Local Authorities Coordinator of Regulatory Services), the British Hospitality Association and an academic from Birmingham University. The Agency received 40 applications for grants and 26 were successful, involving 69 local authorities and a range of other organisations.

Northern Ireland’s creative sector is to receive a funding boost of an extra £5 million over the next three years. The extra money will be delivered in the form of a Creative Industries Seed Fund, which will be used to provide business support to creative businesses. The fund will cover issues such as business planning, access to venture capital and start up finance, help with intellectual property issues and marketing support. It is hoped the fund will boost tourism and culture in the region.

Small companies in Britain are missing out on potential business worth £52 billion because they do not have the funding they require, according to a new survey.

One in eight established small- and medium-sized firms in the UK reported missing a business opportunity last year because they did not have the funds to follow it through, reports GE Commercial Finance.

This in turn resulted in average lost sales across the year of £1.4 million each, the companies reported.

“With firms across the country predicting a healthy year of growth, it is vital that they secure the right amount and type of funding early on if they are to achieve their goals and minimise missed opportunities,” said John Jenkins from GE Commercial Finance.

“Professional advisors have a big role to play in supporting firms by ensuring that they can understand and access the right funding solutions appropriate to their business and, crucially, at the right time,” he added.

Of the firms who’d lost out on potential business, the majority (52 per cent) said they’d not been able to follow through on between one and five opportunities.

Great news for social enterprise businesses - the government have recently allocated £1.4 million in grant finance to UK based social enterprises.

The grants will be used to help fund businesses involved in community health and social care. The full news report is available by accessing this charity funding link.

Any charity or not for profit organisation can also benefit from a reduced price grant funding report from Trade Solutions Business Consultancy.

Raising Finance for a start up business or securing expansion finance for an established business can be an overwhelming experience. There are various sources of external finance available such as relatively simple overdraft facilities or European Grant funding programs which require detailed applications. Although taking on an additional financial commitment can be daunting, the rewards for the growth of your business can be substantial.

This article details all of the various options open to you should you want to raise finance for the growth of your business.

OVERDRAFTS

Overdrafts are one of the most common short-term sources of finance available. They provide a simple and effective way of financing the growth of your business. If your business has a good credit history, your bank will require little information from you to secure a short-term overdraft. Once they have the confidence that you are able to pay it back, the additional borrowing can be instant. It is important that you use the overdraft facility wisely to minimise the cost. Charges for exceeding overdraft limits can be substantial. Use it for seasonal fluctuations in sales, not long term financing.

Why overdrafts?

Ø They are simple and relatively easy to set up
Ø You only pay interest on the amount you use

Pitfalls

Ø In most circumstances, the bank can demand repayment at any time.
Ø The overdraft may have to be renegotiated approximately every six months

Before you approach the bank, put together a proposed cashflow forecast for 12 months to ensure your needs are accurate and that you are able to keep within the limits. You can ask an accountant or business consultant such as www.tradesolutions.org.uk to do this for you.

LOANS

Business loans will provide you with longer-term finance, usually up to 8 years. You will probably need some form of business plan to present to the bank or loan company in order to inform them of the viability of the business and your ability to make the extra payments . They will want to see a proposed cashflow, a profit and loss account and any previous financial accounts you have available. You will also have to prove that you are investing the additional borrowing into the business. To help develop a business plan you could use a software program such as www.getsetforbusiness.co.uk
Why loans?

Ø You can normally secure a fixed rate and spread the payments over a term that suits you
Ø You may be eligible for a loan such as “Women in Business” or “Small Firms Loan Guarantee Scheme” which provide lower interest rates or special dispensation should you not be able to keep up with repayments.

Pitfalls

Ø If you fail to make a payment on a loan, you will acquire a default status which will affect your business credit score.
Ø You may need to provide personal security for the loan

GRANTS

There are currently hundreds of Government, Council and European grants available for small businesses. The grants are allocated to businesses to meet political or economical objectives and most require no repayment. Many of the funding programs are not promoted as the demand would outweigh the supply. Grants will typically be available under the following criteria:

Ø If you have a clear project in mind such as office refurbishment or staff recruitment
Ø If you are able to part-finance the project yourself
Ø If the project is planned in the future, not already undertaken
Ø If you have a business plan

Grants are normally allocated according to sector or location. Some regeneration areas are awarded finance to assist businesses, while other funds are allocated for specific industries.

Local, small value grants normally have a simple application procedure while high value grants will require detailed applications. In most cases you will be expected to have a sound business plan and financial forecast. You can investigate if there are any grants available for your business by ordering a search report from www.tradesolutions.org.uk. The report includes full details on all the schemes you are eligible for and free updates for life if any new schemes become available.

HIRING OR LEASING

Hiring or leasing equipment can ease your cashflow by allowing you to spread costs and minimise capital expenditure. Equipment available for leasing can include vehicles, office equipment such as printers or technical equipment. You must ensure of course that the financing does not exceed the life of the equipment as this will result in negative equity. In addition, you can also upgrade equipment as new technology comes onto the market. Leasing advisers such as www.xlbusinessfinance.co.uk can help you investigate leasing options.

FACTORING

Factoring allows you to raise finance on outstanding invoices. This is not a short term fix for cash flow problems - factoring companies will require at least a 12 month contract and you will be required to factor all of your invoices during the contract period. You generate a clients’ invoice and send it to the factoring company who will then pay you typically 80 – 85% of the invoice value. They will then collect the full invoice from the client, thereby retaining the balance as their fee. This can be a good system to use for cashflow purposes, but you will need to ensure your profit margins can afford to incur this loss.

INVOICE DISCOUNTING

Invoice Discounting works in a similar way to factoring. The difference is the customer has no knowledge that you are using an invoice discounting service. You distribute your invoices in the usual way and send a copy invoice to the Invoice Discounting company. You receive an agreed proportion of the invoice value from the invoice discounter immediately. When payment is received from the customer you are required to submit payment into a dedicated account managed by the invoice discounter. They will then settle the amount owing to you less fees and interest. The cost of this service is dependant upon your turnover and customer base but typical interest rates will be 1.5 – 3% above the Bank of England base rate.

BUSINESS ANGELS

If you are looking for a higher level of investment than the banks are willing to supply, you may consider sourcing a business angel. Business Angels are usually wealthy individuals with an interest in business who will provide capital in return for shares in your organisation. They will often seek involvement in the business which limits the control you retain but they can also offer sound advice and many are entrepreneurs themselves and have experience of running a successful business. Business Angels will typically be looking to invest between £10,000 and £750,000. You can view a list of angels looking for funding opportunities on the British Business Angels Association website - www.bbaa.org.uk

VENTURE CAPITAL

Venture Capital or Private Equity finance is very similar to Business Angel finance. However, VC’s are willing to invest much larger amounts of money. Venture capitalists are typically large organisations looking for opportunities to return around 30% of their investment per annum and will not be interested in investments of less than £250,000. You can view a list of venture capitalist looking for funding opportunities on the British Venture Capital Association website www.bvca.co.uk