Creative Industry Finance: the lowdown on loans - part one

Creative Industry Finance: the lowdown on loans - part one

By Rachel Segal Hamilton IdeasTap 19/11/12

At the third session in our Creative Industry Finance IdeasTap Spa series, guest speaker East London Small Business Centre CEO Pauline Barnett outlined some things to consider when looking to get a loan…

Banks aren’t lending at the moment. As a start-up without a history it is more or less impossible to raise debt finance from a bank. Opening up a business account or getting an overdraft from a bank can be very difficult. If you are at the end of your overdraft, the bank can demand repayment at any time – it is not a loan so you don’t have a loan agreement.

Be clear on what you’re offering. Is it a product or a service? What makes you different? What’s your USP? Are you comparable to other things in the marketplace? If it’s something no one has ever done before, it could be because no one wants it. Is it comparable price-wise to similar things in the market place? Branding is key. 

You won’t be able to raise a penny without a clear business plan. Outline what are you doing. Ask yourself, is there a market – how can you prove that? Do market research. Go out and show people things – not just your friends and family who always say what you’re doing is wonderful. 

Think about your cash flow. What is your sales income? When is your money going to come in? You need to build up relationships before you can get credit so at first you’ll have to buy everything upfront. To save money, you can work from home and get a serviced office address so people don’t know you’re working from home. 

If you’re going into filmmaking, getting a loan might not be the best option because you have to pay it back month by month and you might not make any money for a year. If you can’t get grant funding, seek equity finance. It’s better to have lots of investors putting in small amounts so that they spread the risk.

Get your costing and pricing right. How much is it really going to cost you to bring your product to market? Where will the product be made and how much will that cost? Are you actually going to make a profit? Be honest with yourself. 

If you’re an existing business looking for loan finance you already have a track record and the figures will be there in black and white. Lenders will want to know: what sales you’ve done, who your customers are, how frequently they buy your product or service, what your credit terms are, how much money is owed to you, how many times you’ve gone overdrawn. 

You need to know how to ask for money. This is something that people in the creative industries often find hard.


Click here to read part two of Creative Industry Finance: the lowdown on loans.


Miss any of the Spa events in this series? Download the...

Down to Business: When does a creative idea become a business and how?

Intro to Grant Funding for Creative Businesses
Powerpoint (ArtCo Projects)
Powerpoint (Arts Council England)
Handout on Grant Funding Opportunities

Ins & Outs of Loans for Creative Businesses
Podcast and Powerpoint

A Slice of the Pie: Equity Investment for Creative Businesses
Podcast and Powerpoint


Useful resources

Creative Industry Finance is an Arts Council England programme run by ArtCo Projects offering loans of £5,000 to £25,000 for creative businesses.

If you can’t get a loan from the bank but you have a viable business idea, the East London Small Business Centre might be able to help with mentoring and loans.


More from the Creative Industry Finance series:

Grant funding

Equity finance


Image: Vintage abacuses by H is for home on a CC BY-NC 2.0

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