Business Start-Ups

Debt funding is often the simplest initial source of seed funding to a new start up.

Loans may be advanced from the founders, their friends and family, or from third parties such as banks or other lenders.

Securing bank funding for a start-up is, however, more challenging.

The bank will require a business plan and supporting cash flow forecasts to demonstrate how your new business will be able to pay back the loan with interest.

Without a proven track record and few (if any) assets to offer as collateral, it is often difficult for start-ups to demonstrate this to a bank's satisfaction.

A loan may or may not require security - this could be a charge (usually in the form of a debenture or mortgage) over the assets of the company, including any real property or a personal guarantee by the shareholders or directors (or both).

Our banking solicitors are able to advise upon the various debt funding options available to your business, as well as negotiate loan facility agreements and associated security.

Issuing new shares in your business is another way to raise funding and investment. Equity investment can be particularly advantageous from a tax perspective for investors owing to the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS), encouraging individuals to invest in small, higher-risk trading companies that may otherwise struggle to raise funding.

Equity investment of course needs to be balanced against the level of control, involvement or say that you are willing to give to early stage investors.

Whilst they often provide important business advice, input and connections, an investment round means diluting your personal holding of the business and potentially elements of control.

Potential sources for early-stage equity funding often include:

• Business Angels – wealthy individuals and entrepreneurs who invest in small businesses or start-up businesses;
• Venture Capitalists – organisations who invest money in a new business that they think will grow quickly with a view to making a profit on the sale of their shares;
• Crowdfunding – arranged via regulated entities, a large number of people will invest and pool smaller amounts that will be invested. Crowdfunding can also sometimes be used for debt funding.

Private equity investment is usually reserved for a later round of investment, as they will traditionally only invest in mature businesses, which require both income and capital returns from the start of their investment.  

Our experienced startup lawyers can provide top-tier legal services and specialist legal advice to support your new business from the early stage and throughout.

While some aspects of setting up a business can be carried out by individuals within the company, it is advisable to hire experienced startup lawyers to ensure complex matters, such as the legal structure of the company or business, shareholders’ or partnership agreements are set up correctly and sufficiently.

As the business grows, there may be other areas, such as commercial T&Cs, GDPR compliance and required licences that should be handled by a professional lawyer to ensure your business is legally compliant with any regulations.

Myerson's full service law firm can assist any new business with a range of matters. We have employment, real estate, commercial, and intellectual property teams that aid the corporate solicitors with startup companies.