There are three ways to fund your business in Ireland: debt, equity, cash.
Debt: You borrow money from a lendor, for example, business loan from bank.
Equity: You receive cash from an investor in return for part ownership of the company.
Cash: You receive cash from your personal savings, friends, family or grants from government agencies such as the Local Enterprise Office.
This guide goes through a typical process of how to fund your business in Ireland. You may not use all business Startup grants and support but choose one or two options that work for you.
You should also read our guide to business Startup grants and support for more information on the programmes on offer in Ireland.
1. Create a robust business plan
If you are looking to fund your Startup then you must have a viable business idea that is worth investing in. Write a business plan or use the Lean Canvas model template to put your idea down on paper.
This will not only lay out every aspect of your business, it will also help you communicate your business idea better. There may be aspects of starting a business in Ireland you never thought about, so having a robust business plan will make you think about everything in detail.
There are supports available for entrepreneurs who need help writing a business plan. For example, your Local Enterprise Office (LEO) can help by providing mentors to help you with your business plan.
2. Set the business structure up correctly
Many open calls for funding in Ireland are for companies only.
Generally, businesses need to be set up as companies because there is more security for the investor. There is also more scope for growth in companies.
Becoming a Sole Trader in Ireland means all the earnings go to the Sole Trader (minus tax and expenses, etc).
Although you can have a single Director and single shareholder company, any profits made in a company are usually distributed among Directors and shareholders through salary or dividends or put back into the company.
Choosing between a Sole Trader or Limited Company structure may not be a decision you make if the funding you want to receive only deals with companies.
It’s worth looking at the finer details of any open calls if you think you have a chance of receiving funding from them.
Incorporating a company can be done in less than one week but to avoid stress and panic, talk to our Client Services Team today about what services you require to set up.
3. Talk to an accountant
When you’re setting up a company in Ireland, you are creating a separate legal entity. This means that the company can enter into contracts, be sued and it has limited liability. Any potential creditors can only claim against assets in the company.
Companies have share capital and the owners of these shares are called shareholders. Shareholders must first buy the shares in order to become shareholders. It is common in small companies and Startups that the Directors and shareholders are the same people.
When you are looking to fund your business in Ireland, investors usually want ownership of part of your company so you will sell them shares in return for capital. This is also called equity funding. If you go down this avenue, shareholders agreements are usually drawn up to define the rights of the shareholders and their role in the company.
What does a Company Secretary do?
Companies in Ireland are required to have a Company Secretary for the life span of the company.
The Company Secretary is responsible for maintaining your Annual Return Deadline (ARD) with the Companies Registration Office (CRO) and updating the CRO on any changes to your company.
They are also required to cosign important documentation, like the incorporation paperwork (Form A1), Annual Return (Form B1) and bank applications.
As well as that, they should prepare any paperwork regarding issuing new shares in the company or transferring any existing shares to new shareholders.
What does an accountant do?
We recommend hiring an accountant to help you when you are looking for funding. An accountant will help with accounting compliance and ensure all your accounting deadlines are maintained while you are busy sourcing funding.
For example, did you know that shareholders of new companies may be entitled to an income tax refund?
This is called Start Up Relief for Entrepreneurs (SURE). Shareholders could receive a refund of up to 41% on the amount they invest into a company but certain rules that apply before you can claim. Talking to an accountant about your company and its activities will help you save money on your tax bill at the end of the year.
Other things new Directors should know when running a company include what expenses you can claim to reduce your tax liability, how to keep proper books and records using online accounting software, how to pay yourself – salary or dividends – and much more.
Get in touch with our Client Services Team to discuss our company formation and accountancy offers. We’re always happy to help you figure out what you need to get started.
4. Open a business bank account
This is certainly something you can do at the same time as funding your Startup. You need a bank account so you can deposit the money you receive into a secure location.
Check out our guide in the best business bank accounts in Ireland if you’re unsure which bank to choose.
If you are not a resident in Ireland, you may need to come over to have a face-to-face meeting with the bank beforehand. Be sure to talk directly to your bank because the requirements may differ depending on which one you choose.
Avoid unnecessary delays with getting your funding by sorting out your bank application as soon as possible after incorporation.
How to set up a bank account in Ireland?
When you are setting up a business bank account in Ireland, the Directors, Company Secretary and any other authorised signatories must sign the application.
Banks in Ireland have different processes, such as online applications or paperwork applications. They also have different due diligence procedures so you should always talk to the bank about setting an account up.
If you don’t have someone to act as your Company Secretary, you can outsource this role to a professional. We offer Company Secretarial Services for many of our clients who need experts to make sure they are compliant with Company Law.
Our Company Secretary and Accountancy Services are ideal for Startups who need help understanding Irish compliance. It’s especially important for new companies as you may not know the important accounting deadlines in Ireland.
Supports for businesses impacted by Covid-19
On 10th March 2020, the Minister of Business, Enterprise and Innovation (DBEI), Heather Humphreys TD, announced a number of supports to help combat the negative effects Covid-19 will have on businesses in Ireland.
- Strategic Banking Corporation of Ireland (SBCI) Working Capital scheme is eligible for businesses impacted by COVID-19. Loans of up to €1.5m will be available at reduced rates, with up to the first €500,000 unsecured. Apply on their website.
- Enterprise Ireland has a Rescue and Restructuring Scheme for vulnerable but viable firms that need to restructure or transform their business. Get in touch with Enterprise Ireland representatives if you would like more information on this scheme.
- Local Enterprise Offices in every county will be providing vouchers from €2,500 up to €10,000 to support business continuity preparedness, innovation and productivity.
- The maximum loan available from MicroFinance Ireland will be increased from €25,000 to €50,000 as an immediate measure to specifically deal with exceptional circumstances that micro-enterprises – (sole traders and firms with up to 9 employees) – are facing. Applications can be made through the MFI website or through your local LEO.
- The Credit Guarantee Scheme will be available to COVID-19 impacted firms through the Ireland’s Pillar Banks – Bank of Ireland, AIB and Permanent TSB. Loans of up to €1m will be available at terms of up to 7 years. Talk to your local branch for more information.
Examples of debt financing
This is borrowing money from a lender, such as a bank, and usually, you pay the loan back plus interest.
Business loan or overdraft from the bank
Most banks offer business loan applications online. You should start with the bank you are currently with, as you have built a relationship with them already. Pop into your local branch to discuss your loan options.
Depending on what kind of funding you need, you could investigate borrowing a lump sum for long-term use or a business overdraft for short-term use.
Check out our guide on the best business bank accounts for Startups in Ireland. Each of these banks have different loans on offer so talk to your local branch to find the best funding option for you.
Small business loans
Micro Finance Ireland is funded by the European Union and partnered with the Local Enterprise Office. They offer loans to small businesses, including Sole Traders, that have less than 10 employees and less than €2m turnover.
Their loans range from €2,000 to €25,000 and worth looking into if you have been declined a loan from the bank.
Micro Finance Ireland operates on a case-by-case basis and their decisions take the viability of your business and your ability to repay the loan into consideration.
It’s also good to note that even if you have received a loan from the bank, Micro Finance Ireland may still offer you additional funding if you need more capital.
The other good thing about Micro Finance Ireland is that they offer mentoring support from experienced business mentors on the LEO Mentor Panel.
Examples of equity finance
You receive cash from an investor and the investor usually owns part of the company. The investor may have different rights to the founders of the company. You should speak to a solicitor in Ireland to draw up a shareholders agreement.
Some successful entrepreneurs source other Startup companies with seed capital to fund their company. They may also contribute their knowledge, insight or expertise in a certain area or industry.
Enterprise Ireland has very good information on sources of equity finance in Ireland, depending on what stage your company is at.
Types of equity finance:
- Seed capital – This is for companies in the conception and research and development stage. You have identified a commerical opportunity and have new technology or processes to transform into an excellent business.
- Venture capital – This is for commercially ready companies that have a proven track record of success. You already have established contacts and excellent business credientials.
- Development capital – This is for mid-sized companies that focus on exporting. You are well established in the manufacturing or technology sector.
Examples of cash finance
Local Enterprise Office (LEO)
There are 31 Local Enterprise Offices around Ireland. They provide support for small business in terms of mentoring, financial assistance and training.
The LEO is seen as your “First Stop Shop” for guidance on how to start a business in Ireland. They will work with you one-to-one or you can join one of their training programmes. Whether you are a hairdresser, dogwalker, or developed an app, you should talk to someone in the LEO about the next steps for your business.
Each county in Ireland has their own LEO and you can find yours on their website here.
Enterprise Ireland focuses more on businesses that have the potential to become large companies or High Potential Start-Up (HPSU). If you have an innovative product or service, Enterprise Ireland is a good place for you to source funding.
The financial assistance is greater in Enterprise Ireland than the LEO.
Enterprise Ireland has a Competitive Start Fund (CSF) that offers €750,000 in funding. Don’t be scared by its name, you should talk to someone in Enterprise Ireland if you think your business has potential and could do great things!
What is the next step to fund my business in Ireland?
Check out our Guide to Business Startup Grants and Support for more information on Startup grants in Ireland.
If you need help getting your company ready for funding, for example, company formation or accountancy services, get in touch with our expert Client Services Team.
We are always happy to talk you through the services you need.
Call us on +353 (0) 1905 9364 or email email@example.com.