Across 2016, an average of 80 new companies were started every hour in the UK, and small to medium sized business comprised the vast majority of every single sector. Each and every new business requires startup capital, and for small businesses that will often mean either a business loan, or finding a way to self-finance.  Either way, it is imperative that your personal finances are in order if you mean to start a business, as they will likely have a bearing on your ability to secure startup financing for your business.


Perhaps the most crucial aspect of ordering your personal finances is to ensure that your credit rating is not going to hold you back. Starting a business requires an initial investment, and the vast majority of start-ups and small businesses are going to need a business loan. Before applying for a business loan, it’s vital that you check your credit rating, with all major credit agencies, and ensure that it’s healthy.

If you’ve missed the odd payment here and there over the years you should be fine, but if you have many missed payments, or any CCJs (County Court Judgements), a bank or business lender will consider you to be a lending risk.  This could jeopardise your chances of getting a loan, or increase the interest rates they require you to pay on a loan. If your credit rating is generally fine, but needs polishing, it’s worth getting a credit card specifically for the purpose of boosting your credit rating.  Spend on it, make full repayments within the month, and keep this up for a while, and your credit rating will increase.


If you’re self-employed and are planning on using your home for any of your business activities, then it’s crucial that you are aware of what type of mortgage you have, and what types are available.  If you have a residential mortgage, and then, for example, wish to make some renovations to your home in order to conduct business in a part of it – a reflexology studio, a teaching area, a specialist office, it could be anything – you may find that you have a problem. Many mortgage lenders require notification of any building work or modifications, and can, in this instance, decline their permission because you require a commercial or semi-commercial arrangement. On the other hand, if you’re a homeowner and are looking for ways to finance your start-up or small business, you may wish to investigate how to leverage the value of your home’s equity, in order to release some of that value for use in your new enterprise.

Personal finances play a huge role in getting your start up or small business up and running; they can help you source the initial investment that you need, or can make getting that investment very difficult.  Thinking about how your personal finances can impact your business before you start will help you to avoid many of the potential pitfalls.

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