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East Midlands Chamber News

Finding alternative ways of raising cash

Annalise LovettChartered Accountant, Newby Castleman, is encouraging Leicestershire businesses to consider alternative funding options, such as equity or debt crowdfunding, to help finance new projects or provide a cash boost.

The concept of crowdfunding is becoming increasingly popular, providing a crucial alternative for those who have been turned away by the banks, the firm says, adding that there has been a rapid growth in the UK in alternative funding since 2010 and it is continuing to rise.

Crowdfunding is an online platform that gives the public, or “the crowd”, an opportunity to lend to or invest in entrepreneurs needing to raise capital for a new business or in existing firms looking simply for a cash injection.

Equity crowdfunding allows groups of investors with just a small contribution of £10 upwards to fund businesses in return for an equity share in the business. If the business is successful and the value of that equity stake increases, the investor is then able to make a return on what they originally invested.

Annalise Lovett, Partner at Newby Castleman, has two Leicestershire-based clients who have recently used crowdfunding to help their business.

She said: “It’s a great secondary option of sourcing finance for those who have been unsuccessful in borrowing from the banks. Both my clients found the concept of crowdfunding really easy and had quick responses from investors. One of my clients pitched to raise money for a new project and the other for a cash injection to help the business.”

However crowdfunding does come with risks. Annalise added: “Those looking at crowdfunding must consider all their options in terms of what finance is best for them and their business.”