Finding funding

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Finding out what finance is right for your business will depend on a number of factors, for example; the reason you are in business; what you need the money for; how much you need and when you need it; the nature of your business and the market you operate in; your plans for the future and your ambitions for the business.

In general most finance for childcare businesses come from one of three sources:

Private funds - through equity or debt. External equity involves raising money by selling shares in your business, in exchange for giving someone else a share in control of your business and a proportion of the profits and future value. In debt financing the debt is usually secured against the assets of the business or else is guaranteed by you or others. Your business must be able to generate enough cash to make both interest and capital repayments.

Public funds - in the form of grants from government or statutory agencies. The government's National Childcare Strategy has made considerable amounts of public funding available to childcare groups over the past few years in the form of start-up grants and sustainability funding, designed to increase the amount of childcare available. It is likely that public funding for childcare entrepreneurs will be available for some time to come, but it is being increasingly targeted at the most deprived areas of the country. In addition to money that is specifically for childcare, public funding that is earmarked for economic regeneration and community development is often used to develop childcare that supports communities or helps parents into work.

Charitable funds - from donations, trusts or charitable foundations. Money from charitable trusts, foundations and the lottery has traditionally been a way that some voluntary childcare organisations have been started or have sustained themselves. Although many organisations have successes in attracting such funding, continually applying for funds to keep your business going is hard work and can be a waste of valuable resources that would be better spent on improving business practices that would lead to more income through fees.

If you are a community or voluntary organisation in Sheffield or South Yorkshire the South Yorkshire Funding Advice Bureau (SYFAB) gives advice and information on general funding availability and produces the monthly Funding News. There are a number of regeneration and community enterprise initiatives in the region that can help with grants, loans, advice and business support. These can be available to social enterprises, local entrepreneurs and small businesses in South Yorkshire.

For information on specific funds available to out of school clubs in Sheffield contact your business development officer on 0114 249 4941 or e-mail info@osn.org.uk.

This information has been extracted from the SureStart booklet "It's the Business.. a Guide for Childcare Entrpreneurs" Copyright Department for Education and Skills 2003.