Don't risk losing your home, says Liz Barclay

Small business expert Liz Barclay says it is much better to try to secure the money elsewhere.

QUESTION
Lola Akinsola, UK.
I've got a business idea that I think is pretty unique.

However, I'll need at least �700,000 to get it off the ground during the first year of business.

At the moment the only funds I can raise are through home equity release, but that does not compare to the capital needed.

Please can you advise on the best ways to raise capital? Your response and help will be highly appreciated.

ANSWER
Liz Barclay, presenter of Radio Four's You and Yours programme
Be very careful about putting your home on the line.

I don't mean to sound pessimistic, but a big proportion of small businesses don't make it past their first birthday and you don't want to end up homeless.

Talk to your local Business Link about the various ways of raising finance.

There are government grants and loans available which you might qualify for, and they will be able to help you with the business plans you will need to approach the banks.

They can also give you information on venture capital funds through which you might be able to raise up to �500,000.

Business people often say it's easier to raise several millions of finance than to raise a few hundred thousand, and the banks frequently aren't interested in lending the kind of sum you need.

However, you might be able to raise it from more than one source.

The other reason for talking to a Business Link adviser is to work out whether you're being realistic in the amount you want to raise.

It might even be better to consider going for a bigger sum.

To contact Business Link, use the website link on the right, or call 0845 600 9066.

Another option might be to look for a private investor.

Try the Business Angels network which matches businesses with angels - 020 7329 2929 - or its website, which is also listed on the right.

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