As a Small or Medium-sized Enterprise (SME) you may be looking for ways to fund your business.
Whether you are looking for a business loan or an investment, you have options that don’t involve traditional bank loans.
Here we lay out peer-to-peer lending, crowdfunding, and rewards-based crowdfunding as alternative sources of funding that you may not have considered when starting or growing your business in Ireland.
1) Linked Finance - peer-to-peer lending
If you are looking for a loan for your business fast, then LinkedFinance could be one of the best ports of call for you. LinkedFinance loans can be turned around in 24 hours. They provide loans to businesses in a range of sectors, including retail, professional services like consultancies, and construction.
Considered Ireland’s largest peer-to-peer lender, the independent financial institution is well versed in SME lending with two finance options on offer.
- The Term Loan is an unsecured loan of up to €300,000 with interest rates starting at 6%. The interest rate will be decided during the assessment
- The Merchant Cash Advance is also a loan to SMEs but takes the repayment back on a daily basis. The amount that is paid back changes based on a percentage of the SMEs daily revenue. For example, if you are repaying at 10% then whether you make €1,000 one day or €2,000 the next, 10% of your daily earnings will be taken as a repayment,
“Some people really like that because they might have very seasonal businesses, so they want to pay lots when they are getting lots and they want to pay very little when they are getting very little” explains Niall O’Grady, CEO of Linked Finance.
The Merchant Cash Advance Loan is a shorter-term loan paid back in up to a year. Niall says these loans are often taken for expansions, covering the cost of stocking up or to pay an increased wage bill during a time they have taken on extra staff.
“The big advantage of the [Merchant Cash Advance Loan] is that its repayment changes in line with the customers’ ability to repay it,” explains Niall O’Grady, CEO of Linked Finance.
With LinkedFinance, you can have a rapid turnaround on your loan application. Both types of loans can be applied for either by contacting LinkedFinance online or over the phone or you can have someone come talk it over with you.
“If they give us the paperwork, we can have it turned around in a day,” Niall says. “If we have the approval on the day, we can give them the money on the day as well.”
2) Spark Crowdfunding
Spark Crowdfunding has been around for the last few years and is a good place to go for startup funding, although the platform also takes on established businesses.
“We raise equity finance for young start-up companies, primarily. We raise money in the region of €100,000, and the biggest one we have ever done is €2.2 million. Our sweet spot tends to be around €200,000 to €400,000 mark and we are happy to raise that kind of money for startup companies, or even established companies as well,” says Chris Burge, co-founder and CEO of Spark Crowdfunding.
Some things to bear in mind about Spark Crowdfunding
- Spark will take 7% of monies raised on the platform and there is no guarantee that you will raise the funds you are looking for. It all depends on whether investors think you are a good bet
- You will be expected to exit the startup in 3-5 years so they can get a return on their investment. This is something worth bearing in mind when you are considering equity investing
- The investment raised will be made up of many small money investors rather than a few large-scale investors
3) Fund It - Crowdfunding
Fund It applies the same format as Spark Crowdfunding, albeit on a smaller scale. Fund It is crowdfunding for creatives so if this is your niche this could be the funding you need to get that project over the line or off the ground.
Fund It is run by Business to Arts, a not-for-profit organisation working to support resilience and transformation in the cultural sector through research, innovation, and partnership.
This is rewards-based funding so, in return for people’s donations and pledges, you will need to offer something as a reward. You’ll create a menu of rewards based on the amount someone pledges to your project. While some people will not ask for a reward, we were told about 70% of people will expect a reward in return.
The amounts raised on the platform are not on a large scale but if you are looking to raise a few thousand Euros to fund a creative project and have the means to fulfil your rewards duties, it’s a great way to get support from those invested in the Arts.
Fund It takes 8% of your money raised as a fee, and funding is all or nothing. If you don’t reach your funding goal, you get nothing. The shortest funding project is 7 days and the longest is 11 weeks, with the average being about 5-6 weeks.
Larissa is a Fellow Chartered Accountant (FCA) and is the Founder and CEO of Accountant Online, which specialises in company formation, company secretarial, annual accounting services, bookkeeping, tax, and payroll services for micro and small companies in Ireland, Northern Ireland and the UK.
Larissa has been shortlisted for the Image ‘Businesswoman of the Year Award’ in 2017 and 2018 and awarded ‘Accountant of the Year’ in 2018. Larissa volunteers as a role model for LEO Donegal’s ‘Ambition’ programme and is a Lead Entrepreneur for ‘ACORNS’ and ‘Going For Growth’ which are development programmes designed to support ambitious female entrepreneurs, and for ‘Back For Business’, a development programme assisting returned emigrants or those planning to return to Ireland to start and develop a business. Accountant Online has won many awards, including ‘Best Small Practice’ in 2017, ‘Best Medium Practice’ in 2018, and in 2020, ‘Medium Practice of the Year’ and ‘Practice of the Year’.