What type of finance would be suitable for your business?
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Making business finance work for you
about Making business finance work for you Read MoreBased on your answers these types of finance may be worth exploring
For all types of business finance, it’s a good idea to seek independent specialist advice before deciding which type of finance is right for you and your business.
- Equity
Angel Investment
An angel investor is someone who invests their own money into a business in exchange for an equity stake (typically between 10% and 25%).
About the finance Angel Investment
Sectors All Nation/Region All What is angel investment? Angel investors are typically experienced entrepreneurs, or individuals with significant business expertise, who invest their personal funds in exchange for equity in a business.
Beyond funding, angel investors might offer valuable insights, expert guidance, and access to their professional networks.
Is angel investment right for me? An angel investor may be interested in a business if it has a number of the following characteristics:
- Business stage: typically early stage or pre-revenue
- Annual turnover: under £5m
- Sectors: all sectors, but especially suitable for businesses looking to scale
- Regions: all
- Purpose of finance: can fund all types of business activity
- Amount available: usually £5,000 to £500,000, but large syndicates may offer up to £2m
- Duration of finance: typically 3–8 years
- Cost of finance: a percentage share of equity in the business
How long can it take to get finance? Getting an angel investor or angel syndicate to invest in your business doesn’t happen overnight, so prepare to network and do your research. It’s not uncommon for it to take about six months to go from your first approach to an angel to securing investment.
- Equity
Venture Capital
Venture Capital is a form of equity investment where a Venture Capitalist (or VC) will purchase an equity stake in a business.
About the finance Venture Capital
Sectors All Nation/Region All Cost of finance None What is Venture Capital? Venture Capital is a form of equity investment where a Venture Capitalist (or VC) will purchase an equity stake in a business. A VC will then use their capital, expertise, and networks to help that business grow, and therefore improve the value of their stake in the business.
Is Venture Capital right for me? Venture Capital could be a suitable form of finance for your business, if it has the following characteristics:
- Business stage: early stage with high growth potential
- Annual turnover: less than £5m
- Sectors: all, but especially prevalent in sectors such as life sciences, IT, and FinTech
- Regions: all
- Purpose of finance: acquisition, research and development, business growth
- Amount available: £250k to £25m
- Duration of finance: typically, five to seven years before investor exit
- Cost of finance: equity in the business
How long can it take to get finance? You can expect a Venture Capital funding round to take approximately six months to a year.
- Equity
Equity Crowdfunding
Equity crowdfunding is when a business raises capital from a large number of investors in exchange for equity in the business. This is done via an online platform that is regulated and licensed by the Financial Conduct Authority (FCA).
About the finance Equity Crowdfunding
Sectors All Nation/Region All What is equity crowdfunding? Equity crowdfunding is a way for businesses to raise funds from multiple investors. By listing your company on an online platform, both individual investors and the public can purchase shares in your business.
Is equity crowdfunding right for me? Equity crowdfunding could be a good fit for your business if it has the following characteristics:
- Business stage: pre-revenue to more established businesses
- Annual turnover: typically, less than £5m
- Sectors: all
- Regions: all
- Purpose of finance: flexible
- Amount available: up to around £4m typically
- Duration of finance: this depends on the investor
- Cost of finance: this depends on the platform. Some charge a flat fee if your listing is successful, others require a percentage of profit. You will also need to account for the equity sold in your business
How long can it take to get finance? Once your documents are in order, it can take as little as a month to go through the process.
- Equity
Private Equity
Private Equity is a finance type where a business' management team sells a large or controlling stake of the business to a Private Equity firm.
About the finance Private Equity
Sectors All Nation/Region All What is Private Equity? Private Equity is a finance type where a business' management team sells a large or controlling stake of the business to a Private Equity firm.
This can often be termed a ‘buy-in’ or ‘buy-out’ and in return the business receives capital and guidance on growth.
Is right Private Equity for me? Private Equity could be a suitable form of finance for your business if it has the following characteristics:
- Business stage: established businesses with potential for further growth
- Annual turnover: typically, tens of millions
- Sectors: all
- Regions: all
- Purpose of finance: flexible as Private Equity often brings substantial change to the business
- Amount available: typically £25m plus
- Duration of finance: typically, around four to seven years
- Cost of finance: large or controlling stake in the business
How long can it take to get finance? The acquisition process of a business by a Private Equity firm can often take upwards of a year to complete.
- Debt
Business overdraft
A business overdraft is a line of credit your bank provides when you need to withdraw more money than you have available.
About the finance Business overdraft
Sectors All Nation/Region All What is a Business overdraft? A business overdraft is a flexible credit option linked to your business bank account, designed to provide additional short-term cash flow.
Unlike a business loan, which requires fixed repayments and accrues interest on the entire borrowed amount, an overdraft only charges interest on the amount you’ve overdrawn and any potential fees.
Is a business overdraft right for me? A business overdraft could be a suitable form of finance for your business if it has the following characteristics:
- Business stage: any
- Annual turnover: any
- Sectors: any
- Regions: any
- Purpose of finance: flexible
- Amount available: dependent on your credit history
- Duration of finance: short term
- Cost of finance: fees and interest on overdrawn amount
How long can it take to get finance? Obtaining a business overdraft is a simple process that involves discussing your financial requirements with your bank.
- Debt
Business Loans
A business loan (or term loan) is where a business borrows money from a loan provider and pays it back, along with interest, over an agreed payment schedule.
About the finance Business Loans
Sectors All Nation/Region All What is a business loan? Business loans (or term loans) are a common and widely used method for businesses seeking to raise funds.
A lender provides a set amount of money to the business. The business is then required to repay the loan, along with interest, according to a pre-agreed schedule and time period.
Is a business loan right for me? A business loan could be a suitable form of finance for your business, if it has the following characteristics:
- Business stage: any (but more difficult to access for start-ups or businesses without a trading history or pre-profit)
- Annual turnover: any so long as you can demonstrate that you can repay the loan
- Sectors: all
- Regions: all
- Purpose of finance: flexible depending on the specific type of Business loan
- Amount available: typically, up to £100,000 (with more available from secured loans)
- Duration of finance: anywhere from a number of months to 25 years depending on the nature of the loan and the lender
- Cost of finance: dependent on the agreed upon interest rate and any associated fees
How long can it take to get finance? Decisions are dependent on both the lender and the type of loan applied for. Some lenders can approve loans quickly, within days or even hours, whereas others will take substantially longer to reach a decision and draw down the funds.
- Debt
Start up Loan
A Start Up Loan is an unsecured personal loan for business purposes, designed to support new and early-stage businesses.
About the finance Start up Loan
Sectors All Nation/Region All What is a Start Up Loan? A Start Up Loan is a personal loan for business purposes, backed by government and designed to support new and early-stage businesses in the UK.
The loan is unsecured, so applicants don’t need to provide assets or guarantors when applying.
Is a Start Up Loan right for my business? A Start Up Loan isn’t right for every business so it’s important to understand the eligibility criteria:
- Business stage: a new business, or one that has been trading for less than three years
- Annual turnover: N/A
- Sectors: Start Up Loans support most types of business
- Regions: all
- Purpose of finance: to support new and early-stage businesses
- Amount available: £500 to £25,000
- Duration of finance: 1 – 5 years
- Cost of finance: fixed interest rate of 6% per annum
How long can it take to get finance? For well-prepared businesses the application process can take as little as two to three weeks. Others may require more support to complete the application and submit the necessary documents which may lengthen the process.
- Debt
Asset-Based Lending
Asset-based lending is a type of business financing where a company uses its owned assets as security to secure a loan.
About the finance Asset-Based Lending
Sectors All Nation/Region All What is asset-based lending? Asset-based lending allows businesses to secure financing by using assets they own, such as inventory, accounts receivable, property, stock or equipment, as collateral against a business loan or credit line.
Is asset-based lending right for me? Asset-based lending could be a suitable option for your business depending on the following criteria:
- Business stage: established businesses with assets
- Annual turnover: any
- Sectors: all
- Regions: all
- Purpose of finance: few restrictions
- Amount available: up to £5m
- Duration of finance: application dependent
- Cost of finance: application dependent
How long can it take to get finance? The timeframe for securing asset-based lending typically ranges from a few weeks to a couple of months. The exact duration can vary depending on the complexity of the application, the due diligence process and the lender's assessment of your business and assets.
- Debt
Invoice Finance
Invoice finance allows you to secure funding by using your unpaid invoices as collateral.
About the finance Invoice Finance
Sectors All Nation/Region All What is invoice finance? Invoice finance allows businesses to use unpaid invoices as collateral for funding, providing quick access to a percentage of the invoice value (known as an ‘advance’), which helps address immediate cash flow needs.
Is invoice finance right for me? Invoice finance could be an option for a business that matches the following criteria:
- Business stage: established (with a trading history)
- Annual turnover: any
- Sectors: any
- Regions: any
- Purpose of finance: highly flexible
- Amount available: dependent on how much is owed to your business through invoices
- Duration of finance: dependent on the terms of the agreement
- Cost of finance: dependent on the discount charge (similar to interest rate) and processing fees
How long can it take to get finance? Although setting up an invoice finance facility can take some time, once the setup is complete, funds can typically be made available within 24 hours of issuing new invoices.
- Debt
Peer-To-Peer Lending
Peer-to-peer lending is a type of business financing that enables individuals or businesses to lend money directly to others, avoiding the need to go through traditional banks.
About the finance Peer-To-Peer Lending
Sectors All Nation/Region All What is peer-to-peer lending? Peer-to-peer lending operates by connecting borrowers with lenders through online platforms or offline brokers.
To apply, you complete an online form and provide details about your business, including how you plan to use the loan, the amount you wish to borrow, and the repayment period.
Is peer-to-peer lending right for me? Peer-to-peer lending could be a suitable form of finance for your business if it has the following characteristics:
- Business stage: established businesses with a trading history
- Annual turnover: business dependent
- Sectors: all
- Regions: all
- Purpose of finance: can be flexible but may need to be stated in the application form
- Amount available: business dependent
- Duration of finance: business dependent
- Cost of finance: business dependent
How long can it take to get finance? Peer-to-peer loans are generally processed faster than traditional bank loans. That said, lenders must carefully assess the risks and potential returns associated with this type of lending. As a result, while the process is often quicker, it can still take several days, or even weeks, to finalise the loan.
- Debt
Export Finance
Export finance (also known as Trade finance) is designed to help UK businesses export their goods and services to overseas markets.
- Debt
Mezzanine finance
Mezzanine finance is a business loan that blends two types of funding approaches: equity and debt.
About the finance Mezzanine finance
Sectors All Nation/Region All What is mezzanine finance? Mezzanine finance is more complex than business loans, but it allows lenders to support business growth while reducing their risk.
Any asset security provided by the borrower will rank behind the security it has provided to "senior" lenders. If the borrower fails to repay the loan, the lender may often have the option to convert it into an equity stake in the business.
Is mezzanine finance right for me? Mezzanine finance could be a suitable form of finance for your business if it has the following characteristics:
- Business stage: established businesses with potential for further growth
- Annual turnover: application dependent
- Sectors: all
- Regions: all
- Purpose of finance: application dependent
- Amount available: application dependent
- Duration of finance: application dependent
- Cost of finance: application dependent
How long can it take to get finance? As mezzanine finance is more complex and involves greater risk, the application process can often take a significant amount of time to complete successfully.
- Business stage: established businesses with potential for further growth
- Debt
Business Credit Cards
A business credit card is solely for corporate use and offers businesses a practical short-term financing solution.
About the finance Business Credit Cards
Sectors All Nation/Region All What is a business credit card? A business credit card is tailored exclusively for corporate use, rather than personal expenses.
For small business owners, a business credit card offers a practical solution to separate personal spending from business-related expenses, which supports clearer financial organisation.
Is a business credit card right for me? A business credit card could be a suitable form of finance for your business:
- Business stage: any – different cards will cater to businesses at different stages
- Annual turnover: most credit cards have a minimum income requirement but this changes depending on the specific card and lender
- Sectors: all
- Regions: all
- Purpose of finance: extremely flexible
- Amount available: dependent on credit history and overall financial health of the business
- Duration of finance: short term
- Cost of finance: interest rate based on credit history
How long can it take to get a business credit card? How long it takes to successfully apply for a business credit card depends on the provider but typically it could take 5-10 days for a lender to make a decision. There are some lenders, though, that offer instant decisions and virtual card access.
- Other
Business Grants
Business grants are a non-repayable source of funding provided by either the public or private sector and often need to be used for a specific business need.
About the finance Business Grants
Sectors All Nation/Region All What is a Business Grant? Business grants are a source of funding from the Government or a private organisation. They differ from other forms of finance, as the business does not need to pay back the funding it receives or give away a share of the business in exchange for the funding.
Is a Business grant right for me? Business grants are often designed to support a particular sector, location or even the specific objectives of the project. Eligibility is dependent on the specific grant criteria:
- Business stage: grant criteria dependent
- Annual turnover: grant criteria dependent
- Sectors: grant criteria dependent
- Regions: grant criteria dependent
- Purpose of finance: grant criteria dependent
- Amount available: grant dependent (most awards are typically less than £100,000)
- Duration of finance: N/A
- Cost of finance: None
How long can it take to get finance? Application processes can take time, and there is no one-size-fits-all approach. It’s a good idea to first speak with the grant provider to find out more about the process and whether you’re eligible.
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