Start-up financing with particular reference to Malta

Abstract

Every business needs an idea to get it started, however the funding of a new enterprise can be difficult. A consolation is that everyone starting a business has to go through the same process, and the satisfaction of succeeding makes it all worthwhile. One should understand that if the basic idea is right, it could be made to work, particularly if use is made of all the assistance that is available. Committing ones own funds is often the first financing step. It is certainly the best indicator of how serious one is about his business. Next come banks, which are an obvious source of funds, together with other loan sources, namely, commercial finance companies, venture capital firms, local development companies and life insurance companies. Trade credit, selling stock and equipment leasing also offer alternatives to borrowing. Owners and managers need not only know the various sources of finance available, but also how to be able to put themselves in the best possible position to raise it. Surprisingly enough, there is no shortage of funds, however, problems lie in the business proposition itself, or, more often, in the way in which the proposition is made to the financier. Any fund raising application will almost certainly require the submission of a 'business plan'. This applies equally to banks for overdrafts and loans, government departments for grants, and venture capital investors for loans and equity.