Finance Start-Up – Raising Money – How to Fund Your New Cyprus Business
There are many different ways to raise money for your business venture – certainly a lot more choice than just asking your bank for a loan.
Before you start, it’s best to look at your own assets first. Get a clear idea of how much money you are going to need to start your business, with the help of a professional such as your accountant.
Take it month by month: what money do you forecast will come in and how much will go out? Don’t do what nearly everyone does – underestimate costs and overestimate income. Take into consideration the potential perils of late payers and any likely seasonal effects.
You have one option open to you if you want to be totally self-reliant: you can plunder your savings or cash in investments. It will hurt, but at least if the new business does go wrong you won’t have a heap of debt adding insult to injury.
If this is out of your financial reach, consider another low-risk strategy – starting off part-time, while working during the day for someone else.
Depending on what your business is, you may be eligible for a grant, which might be an interest-free loan, match your investment or even be a lump sum.
The next option, and arguably the widest used, is to borrow money. You may decide to re- mortgage your home, but this means if you cannot repay the debt as agreed, your house is under threat of repossession.
Overdrafts and credit cards are another couple of possibilities, but they are expensive ways of borrowing money.
Offers of loans from friends or family should be treated with caution. When it comes to the age-old warning of mixing business with pleasure, a truer word has arguably never been spoken. If things go wrong important relationships could suffer.
However, if you are confident that your acceptance won’t jeopardize any family situations, ensure you agree concrete terms before the loan is given. And then, back it up with a legally-binding agreement, signed by you and your backer.
You may also wish to consider factoring, where you sell your debt to another company. It’s a common aid for those businesses who have to offer credit terms on invoices, but cannot afford to wait 30, 60, or 90 days to be paid. You receive the money immediately, and your customer pays the factoring firm directly. You will be charged a percentage fee, but at least it will help prevent you from borrowing a lump sum. Factoring is normally only an option for businesses that will be turning over a fair amount quite quickly.
If you want to seek an outside individual to help, your first port of call could be someone you have met along the way in business, who you know has money to invest. If you already have a rapport with them, they could make an excellent partner.
The cash from an outside investor could be essential to get started. But are you really ready to effectively hand over part of your business to a stranger? They may or may not be helpful and hands-on, and will more than likely want to meddle and give you their opinion if things don’t go according to plan. Sure, they have the right to find out at regular intervals how you are doing, but it could create problems if they become unwilling to let you take general charge.
Access to Finance and Financial Assistance in Cyprus
At a time of increasingly intensified international competition, the Cyprus Government has taken several measures and introduced certain incentives to enhance Cyprus’ competitiveness, both in the international and local market; to achieve steady and self-sustained growth; and to maximize the country’s Gross Domestic Product. Specifically, having extensively considered ways for the development and reconstruction of the economy, the Government has introduced a framework of incentives within the EU harmonization process and the acquis communautaire in general.
There are several sources of funding available to small- and medium-sized businesses setting up in Cyprus. There are a wide range of investment motives and sponsor plans available through the Cypriot government, particularly for those working in the technology and research sectors. The Ministry of Commerce, Industry and Tourism handles applications for them.
The basic goals, which form the central core of the government’s incentives framework, are:
- Attraction and development of new high-tech industries and skill intensive products
- Assistance and reconstruction of Cyprus traditional economic sectors
- Improvement of productivity and labour skills
- Attraction of capital-intensive foreign investment
The main incentives and schemes are described in more detail on our website under incentives.. Please note that the various grant schemes may be subject to alterations.
