Small business finance in UK is available in the typical forms of Equity, Debt and Government Grant. We focus on UK-specific information in this article. For general small business financing information, read the separate article Small Business Funding.
Right Kind of Finance
Your business can get advice and financial help from government-backed schemes. Simply enter your details and select the type of business or financial support you need.
You can also get:
Different Kinds of Finance
Guides are available for other kinds of small business finance in UK and also for different aspects of financing, including business planning.
Grants are available from different sources:
- From local sources such as County Council, Regional Development Agency, Chambers of Commerce and Learning & Skills Council;
- From national sources including Department of Trade and Industry, Trade Partners UK and Department for Environment, Food and Rural Affairs;
- At European level from sources like European Regional Development Fund, European Social Fund, European Agricultural Guidance & Guarantee Fund and Financial Instrument for Fisheries Guidance.
Grants as a source of small business finance in UK is discussed separately in Government Small Business Grants article.
Small Firms Loan Gurantee
Loans are typically granted by private lenders who evaluate your loan request. If your proposal looks promising to them and you have some collateral security to offer, they might grant the loan.
Small businesses and service businesses might find it difficult to obtain small business finance on normal terms. In such cases, if the business proposal is viable, Small Business Service of UK could guarantee the repayment of the loan under Small Firms Loan Guarantee Scheme. 75% of the loan amount could be covered by the guarantee and the borrower would pay a premium of 2% to SBS for the service.
Business Angels and Venture Capitalists
If you are willing to give a share in your business to outside investors, you might be able to raise equity capital from business angels or venture capitalists. These financiers expect high returns and also look to sell their shares at the earliest for capital gains. Your business must promise these.
Factoring is a convenient source of working capital finance. Factors are financiers who would discount your accounts receivable invoices. They would advance money to you against invoices sent to creditworthy customers, and then collect the money from the customers direct.
You can go to the Factors and Discounters Association Web site if you wish to tap this avenue.