There are three main ways to fund your business in Ireland: debt, equity, cash.
Debt: Borrow money from a lender, for example, a business loan from a bank.
Equity: Receive cash from an investor in return for part ownership of the company.
Cash: 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 from the moment you have a business idea. We’ll go through some examples of each type of funding and you can choose one or two options that work for you.
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 layout every aspect of your business, but 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 so you may need to ensure you’ve incorporated your business before applying for funding or a small business loan.
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.
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 are looking to fund your business in Ireland, investors usually want ownership of part of your company so you will sell the shares in return for capital. This is also called equity funding.
Talking to an accountant will help you work out the details of how to set up your company correctly.
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.
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?
Accountants help with accounting compliance with Revenue and the CRO 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/investors can receive a refund of up to 41% on the amount they invest in 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.
New Directors should also know 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.
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 in 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.
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 has 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.
MicroFinance 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 commercial 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 credentials.
- 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!
Have you heard about Revenue-Based Financing (RBF)?
Revenue-Based Financing (RBF) is becoming increasingly popular over the last few years – this type of funding is a “fixed sum that’s repaid over time based on incoming revenue. Founders receive money from an investor to spend on marketing or inventory, and with every sale they make, they repay a percentage of that loan.”
Although it doesn’t give Startup companies the same level of investment, there is a lot to be gained from having instant cash available to get started.
Get Started by finding the right services for you.
We are always happy to talk you through the services you need. Call us on +353 (0) 1905 9364 or email email@example.com.
You may also like to read more about Business Startup Grants and Support. This guide outlines different sources of government grants for entrepreneurs starting a business as well as grants that support SMEs.