You have a killer idea for a start-up that you are convinced will change the world. Maybe your dream organisation is a purely profit-driven business designed to meet a need no one else has addressed. Perhaps your idea is best pursued as a charitable organisation that seeks to serve those in need. Either way, you will face the same obstacle that every other entrepreneur faces: funding.

It is surprising how many people seek to start a brand-new business or charity without considering the financials. They may think about business loans [1] in a cursory sense, but many don't stop to think through all the implications of funding a new start-up. It is not as simple as taking a few hundred pounds out of your bank account to buy a domain name and build a website.

New start-ups require enough funding to cover all the initial expenses involved with getting up and running. Rest assured that this list is rather long. It includes permits and licences, office equipment and supplies, office space, marketing, insurance, labour, and on and on. In some cases, start-ups require several years of funding if they expect to reach long-term viability.

So what is an entrepreneur to do? The best place to start is by looking at business loans. There are three ways to approach business loan funding, as explained below.

1. Banks and Building Societies

The first-place entrepreneurs tend to look is their local bank or building society. Both are apt to make business loans available to customers who have strong ideas, solid business plans [2], and good financial histories. But there are never any guarantees. A bank could make a loan for one customer then turn around and deny another without any rhyme or reason.

Business loans from banks and building societies can also be quite expensive. A lack of competition sees to that. Unfortunately, far too many entrepreneurs find they cannot obtain traditional bank financing to get their enterprises up and running. That leads them to the second option.

2. Privately Funded Business Loans

Being turned down by a bank or building society is not the end of the road. Entrepreneurs can look at privately funded business loans from independent financing companies. These sorts of companies rely exclusively on their own assets for lending. No outside cash is brought in. They are typically more open to new business ventures compared to banks and building societies, especially when those ventures offer good chances of success.

3. Peer-to-Peer Lending

Peer-to-peer (P2P) lending [3] is comparatively new to the business loans scene. This sort of funding is somewhat unique in that it doesn't quite work like a bank but it's also not the same thing as angel investing or private equity. P2P lending is a scenario in which a number of investors have pooled their financial resources in order to make otherwise traditional loans to entrepreneurs, business owners, and even individuals.

P2P business loans tend to be easier to get than bank and building society loans. Interest rates and fees can be higher though because P2P platforms are taking a bigger risk with each loan made. A P2P arrangement is probably not the best bet for a charitable organisation or a business that needs long-term funding.

Other Funding Options

In the absence of business loans, there are still other options that entrepreneurs can look at. One of them is crowd funding. Another is asking family members, friends, and acquaintances to invest in the start-up. From time to time there are even government grants available for both businesses and charities.

Regardless of how the entrepreneur goes about it, his or her start-up is not going to get off the ground without adequate funding. That's the way it works. Entrepreneurs need to carefully consider the amount of funding they will need to keep things going until enough revenue comes in to maintain self-sufficiency. If business loans will cover it, fine. If not, other sources of funding have to be pursued.