- Routes62on 8 rungs
- Orderby costnever by who pays
- Sourcedevery factprimary sources
Every way a business can raise money, cheapest first
How the ladder works
Borrowing is ranked by what the money costs, from free or nearly free on the first step to expensive or fast on the last. The steps are an order, not a price. Cost figures are only shown on a route's own page, where a source gives them.
Selling shares is a separate climb. It costs no interest, so it is ranked by how much ownership and control you give up instead of a made-up interest rate. Over time it can be the most expensive money of all.
Pick a step, or a rung on the ladder, to see its routes, each with an upside and a downside.
Or start from your situation
- Paying for equipment, vehicles or machinery
- Funding a community project
- Raising money before you have sales
- Thinking about a stock market listing
- Cash while you wait for customers to pay
Information, not advice. Read the disclaimer.
L0 · Borrowing
Free or nearly free
Little or no cash cost, though most take time and admin. Some bring money in, and a few have small fees.
- Routes
- 10
- Speed
- Days to months
- Personal guarantee likely
- 0 of 10
- Secured on assets or invoices
- 0 of 10
- +Upside
- Costs nothing and gives up no shares
- −Downside
- Some customers will not pay up front, or will want a discount for it
- +Upside
- Free to use, and the interest is usually much higher than bank savings rates
- −Downside
- It does not bring cash in today. You only get it when the customer pays
- +Upside
- Free if you pay on the agreed date
- −Downside
- Suppliers set the terms, and new businesses may get little or none
- +Upside
- A legal right if you qualify, with no application to win
- −Downside
- Does not bring in cash up front. You still have to pay for the asset or project first
- +Upside
- No shares given up and nothing to repay
- −Downside
- Places are limited and selection is competitive
- Innovate UK grantsMonths
- +Upside
- Money you do not pay back, and no shares given up
- −Downside
- Highly competitive, with no guarantee of success
- +Upside
- Money you do not pay back, with no shares given up
- −Downside
- Usually small amounts, and you pay part of the cost yourself
- +Upside
- Nothing to repay and no shares given up
- −Downside
- You get the money after you have spent it, often many months later
- +Upside
- Nothing to repay, no shares and no rewards to deliver
- −Downside
- Only works for causes people want to give to
- +Upside
- No shares given up and nothing to repay
- −Downside
- You must deliver the rewards, which can cost more than expected
See L0 on the list of all routesCompare routes
Information, not advice. Ordered by cost, never by who pays. Disclaimer
L1 · Borrowing
Very cheap or subsidised
Borrowing on better terms than the market, usually because a public body, community lender or large buyer is involved.
- Routes
- 7
- Speed
- Days to months
- Personal guarantee likely
- 3 of 7
- Secured on assets or invoices
- 4 of 7
- +Upside
- Avoids enforcement action if HMRC agrees a plan
- −Downside
- Interest is charged on the overdue tax
- +Upside
- Will consider businesses that banks have turned down
- −Downside
- Unsecured loans usually need a personal guarantee
- +Upside
- Can help you borrow when a lender would otherwise say no
- −Downside
- You are still 100% liable. The guarantee protects the lender, not you
- +Upside
- Designed for organisations that banks often find hard to lend to
- −Downside
- Only for organisations with a clear social purpose
- Start Up LoansWeeks
- +Upside
- Fixed interest rate, so repayments are predictable
- −Downside
- It is a personal loan, so you owe it even if the business fails
- +Upside
- Helps exporters get bank finance they might not otherwise get
- −Downside
- Only for businesses that already export enough to meet the thresholds
- +Upside
- Suppliers: get paid early, usually at a lower rate than other funding because the cost is based on the buyer's credit
- −Downside
- Suppliers: you cannot use it unless your customer offers it
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Information, not advice. Ordered by cost, never by who pays. Disclaimer
L2 · Borrowing
Mainstream secured debt
Standard borrowing from banks and mainstream lenders, often secured on assets or backed by a personal guarantee.
- Routes
- 11
- Speed
- Days to 6 months or more
- Personal guarantee likely
- 7 of 11
- Secured on assets or invoices
- 8 of 11
- +Upside
- Aimed at businesses that might otherwise not get finance
- −Downside
- Commercial terms, so loans can cost more than a mainstream bank loan
- +Upside
- Lends from £1,000, so it can help very small businesses
- −Downside
- Only for businesses based in Wales or moving there
- +Upside
- A range of loans and equity for businesses at every stage in Northern Ireland
- −Downside
- Only for businesses in Northern Ireland
- Scottish National Investment Bank6 months or more
- +Upside
- Large, long-term investment that private investors may not offer
- −Downside
- Only for amounts of £1 million or more
- +Upside
- Get the equipment now without a large upfront payment
- −Downside
- Costs more in total than paying cash
- +Upside
- Unlocks cash from assets you already own, without selling them
- −Downside
- You can only raise part of the asset's value
- +Upside
- Predictable repayments make planning easier
- −Downside
- Secured loans put the asset at risk, and unsecured loans usually need a personal guarantee
- +Upside
- Quick to get, and useful for everyday and unexpected costs
- −Downside
- High interest on balances you carry over
- +Upside
- Quick and simple to arrange with your bank
- −Downside
- Usually a higher interest rate than a business loan
- Commercial mortgageMonths
- +Upside
- Long repayment terms keep monthly payments lower
- −Downside
- Ties up capital in a deposit and buying costs
- +Upside
- Draw money only when you need it, and pay interest only on what you use
- −Downside
- Usually more expensive than a term loan
See L2 on the list of all routesCompare routes
Information, not advice. Ordered by cost, never by who pays. Disclaimer
L3 · Borrowing
Specialist secured debt
Borrowing secured on specific assets such as invoices or stock, with more fees and conditions than mainstream debt.
- Routes
- 10
- Speed
- Days to months
- Personal guarantee likely
- 3 of 10
- Secured on assets or invoices
- 9 of 10
- +Upside
- Can unlock more funding than other products
- −Downside
- Mostly for established businesses with sizeable assets
- +Upside
- Turns unpaid invoices into cash quickly
- −Downside
- You still do all the credit control work
- +Upside
- Turns unpaid invoices into cash quickly
- −Downside
- Your customers deal with the factor, which some businesses do not want
- +Upside
- More flexible and tailored than bank lending
- −Downside
- Costs more than bank lending
- +Upside
- Choose which invoices to finance, and only when you need to
- −Downside
- Costs more per invoice than a full factoring or discounting facility
- +Upside
- Lets you take on large orders you could not otherwise fund
- −Downside
- Expensive compared with bank borrowing
- +Upside
- Reduces the risk of not being paid by overseas buyers
- −Downside
- Usually needs a trading history and assets, so start-ups may struggle
- Venture debtWeeks
- +Upside
- Extends your runway without selling more shares
- −Downside
- Interest rates are higher than traditional bank loans
- +Upside
- Fast online applications and decisions
- −Downside
- Rates can be higher than bank loans for riskier businesses
- +Upside
- Large sums for many years, without giving up shares
- −Downside
- Costly and complex to set up
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Information, not advice. Ordered by cost, never by who pays. Disclaimer
L4 · Borrowing
Expensive or fast
Quick to arrange, often unsecured, and usually the most expensive way to borrow.
- Routes
- 6
- Speed
- Days to months
- Personal guarantee likely
- 1 of 6
- Secured on assets or invoices
- 1 of 6
- Bridging loanDays
- +Upside
- Very fast, sometimes within 48 hours
- −Downside
- Expensive compared with most business finance
- +Upside
- Quick, with little paperwork, because the platform already sees your sales
- −Downside
- Only available from platforms you already sell through
- +Upside
- Fast. Money can arrive within hours of approval
- −Downside
- Usually much more expensive than other options
- +Upside
- No shares given up
- −Downside
- Strict promotion and public offer rules, and legal costs to match
- +Upside
- No shares given up
- −Downside
- A fixed fee can mean a high cost, especially if you repay quickly
- +Upside
- Very quick decisions and funding
- −Downside
- High interest and fees
See L4 on the list of all routesCompare routes
Information, not advice. Ordered by cost, never by who pays. Disclaimer
E1 · Equity
Light dilution
You sell a small share of the company, usually to many small investors or people you know, and keep control of how it is run.
- Routes
- 5
- Speed
- Weeks to months
- You give up
- A small share of the business
- Community sharesMonths
- +Upside
- Raises money and builds local support at the same time
- −Downside
- Only open to co-operatives and community benefit societies
- Equity crowdfundingMonths
- +Upside
- No repayments or interest
- −Downside
- You give up part of the ownership of your company
- Friends and familyWeeks
- +Upside
- Often available when banks and investors are not
- −Downside
- Puts personal relationships at risk
- +Upside
- No valuation needed now
- −Downside
- Any agreed discount gives investors cheaper shares than later investors
- +Upside
- No need to agree a valuation now
- −Downside
- Founders are diluted when the notes convert, possibly more than expected if the valuation is low
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Information, not advice. Ordered by cost, never by who pays. Disclaimer
E2 · Equity
Significant dilution and investor rights
Investors take a meaningful stake and usually get rights such as a board seat, a veto over big decisions, or a preferred return.
- Routes
- 7
- Speed
- Months to 6 months or more
- You give up
- A significant share, plus investor rights
- Angel investmentMonths
- +Upside
- No repayments or interest
- −Downside
- You give up part of the ownership of your company
- Corporate venture capital6 months or more
- +Upside
- Money plus the corporate's expertise, networks and distribution
- −Downside
- You give up shares, and growth is not guaranteed
- Family offices and wealthy private investors6 months or more
- +Upside
- Can be more patient and flexible than investment funds
- −Downside
- Hard to find, and no standard way to apply
- Venture capital6 months or more
- +Upside
- Large amounts of capital for rapid growth
- −Downside
- You give up ownership in each round
- +Upside
- Shareholders, including staff, can sell some shares without a full listing
- −Downside
- No new money for the company
- +Upside
- Can reach a global pool of buyers
- −Downside
- Very high risk for buyers. The FCA warns they should be prepared to lose all their money
- Tokenised securities (digital shares and bonds)6 months or more
- +Upside
- A regulator-backed sandbox to issue and trade securities on new technology
- −Downside
- Very new, with few venues and investors so far
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Information, not advice. Ordered by cost, never by who pays. Disclaimer
E3 · Equity
Major dilution, loss of control or public obligations
Investors take control, or the company becomes publicly traded and takes on ongoing public rules, costs and scrutiny.
- Routes
- 6
- Speed
- Months to 6 months or more
- You give up
- Control, or the duties of a public company
- Employee ownership trust (a sale, not a raise)6 months or more
- +Upside
- Owners can sell without finding an outside buyer
- −Downside
- Does not raise money for the business. Profits go to paying the former owners
- +Upside
- Owners can sell to people who know the business
- −Downside
- Debt taken on to fund the purchase must be repaid from the business's cash
- Private equity (including buy-outs)6 months or more
- +Upside
- Large amounts of capital plus hands-on operational expertise
- −Downside
- You usually give up control
- +Upside
- Raise money from a wide range of investors, and raise more later
- −Downside
- Expensive to join and to stay on, every year
- +Upside
- A public market open to early-stage companies
- −Downside
- A smaller market than the London Stock Exchange, with fewer investors
- London Stock Exchange Main Market listing6 months or more
- +Upside
- Access to the deepest pool of public capital in the UK
- −Downside
- The most expensive and demanding route to join and stay on
See E3 on the list of all routesCompare routes
Information, not advice. Ordered by cost, never by who pays. Disclaimer