I sell services to other businesses, such as consulting, marketing, recruitment or IT
Ways to cover payroll while clients take time to pay, and to grow without big assets to borrow against, cheapest first.
Service businesses mostly sell time and skills, so they have few machines or buildings to borrow against. What they often have is unpaid invoices: the work is done and the staff are paid, but the client pays weeks later.
If you did not agree a payment date, the law says a payment from another business is late 30 days after the client gets your invoice, or after you provide the service if that is later. You can then claim interest at 8% a year plus the Bank of England base rate, and a fixed sum of £40, £70 or £100 for each late payment, depending on its size. You cannot claim the statutory rate if your contract sets a different one.
Large companies must publish how long they take to pay their suppliers, and how many payments they make late, at least twice a year. You can search their reports on GOV.UK before you agree terms with a new client.
23 routes to look at, cheapest first
Compare the first 4 side by side- L0
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.- Own cash and no-cost
Customer prepayments, deposits and pre-sales
Ask customers to pay some or all of the price before you deliver. The cash arrives before your costs, so you borrow less, but you owe customers the goods or a refund until you deliver.
Days - Own cash and no-cost
Statutory late-payment interest and compensation
If another business pays you late, the law lets you add interest and a fixed compensation sum to the debt. It costs nothing to claim and can speed up payment.
Days - Own cash and no-cost
Supplier trade credit (negotiated payment terms)
Agree with your suppliers to pay them some time after they deliver. It works like a short, interest-free loan, but suppliers set the limits and may want a track record first.
Weeks - Grants, tax reliefs and prizes
Capital allowances, Patent Box and creative-industry reliefs
Tax reliefs that cut your tax bill when you buy equipment, earn profits from patents, or make films, TV, games or shows. They do not bring in new money, but they leave more of your own cash in the business.
Months - Grants, tax reliefs and prizes
Equity-free accelerators, fellowships and prizes
Programmes and competitions that give founders money, training or both without taking shares. Places are limited and competitive, and the money is usually modest.
MonthsUp to £75k - Grants, tax reliefs and prizes
Local, regional and sector grants
Grants from councils, combined authorities, the devolved governments and sector bodies, often for equipment, jobs, energy saving or exporting. You do not repay them, but they are usually small and come and go.
MonthsUp to £315k
- Own cash and no-cost
- L1
Very cheap or subsidised
Borrowing on better terms than the market, usually because a public body, community lender or large buyer is involved.- Own cash and no-cost
HMRC payment plan (Time to Pay)
If you cannot pay a tax bill on time, HMRC may agree a payment plan so you can pay it off in monthly instalments instead of all at once.
DaysNot a raise - Government-backed and community lending
Community development finance (CDFI) loans
Loans from Community Development Finance Institutions, lenders that exist to support small businesses, start-ups and sole traders that mainstream banks often overlook.
DaysPersonal guarantee likely - Government-backed and community lending
Growth Guarantee Scheme
A British Business Bank scheme that gives accredited lenders a 70% government guarantee, so they can offer loans, overdrafts, asset finance and invoice finance to smaller businesses they might otherwise turn down.
Weeks£1k to £2mPersonal guarantee likely - Government-backed and community lending
Start Up Loans
A government-backed personal loan of up to £25,000 at a fixed rate, for people starting a business or in their first five years of trading, with 12 months of free mentoring.
Weeks£500 to £25k - Supplier and buyer-led finance
Supply-chain finance (reverse factoring)
A large customer sets up a scheme so its suppliers can be paid early by a finance company, at a cost based on the customer's credit rating rather than the supplier's.
Weeks
- Own cash and no-cost
- L2
Mainstream secured debt
Standard borrowing from banks and mainstream lenders, often secured on assets or backed by a personal guarantee.- Bank and mainstream debt
Bank term loan
A fixed amount borrowed from a bank or other mainstream lender and repaid in regular instalments over an agreed term, with interest.
WeeksPersonal guarantee likely - Bank and mainstream debt
Business credit card
A credit card in the business's name, with a spending limit and often a short interest-free period. Handy for everyday costs and small purchases, but expensive if you carry a balance.
DaysPersonal guarantee likely - Bank and mainstream debt
Business overdraft
A borrowing limit on your business bank account. You pay interest only on what you use, but the bank can usually ask for it back at any time.
DaysPersonal guarantee likely - Bank and mainstream debt
Revolving credit facility
A credit limit you can draw on, repay and draw again, paying interest only on what you use. It is quick and flexible for short-term needs, but usually costs more than a term loan.
DaysPersonal guarantee likely
- Bank and mainstream debt
- L3
Specialist secured debt
Borrowing secured on specific assets such as invoices or stock, with more fees and conditions than mainstream debt.- Asset-based and specialist lending
Asset-based lending (ABL)
A loan or credit line secured on a mix of business assets, such as invoices, stock, equipment, property and sometimes intellectual property, with the amount based on what those assets are worth.
Weeks - Asset-based and specialist lending
Invoice discounting
Borrow against your unpaid invoices while you keep collecting payments from customers yourself, usually without them knowing you use finance.
WeeksPersonal guarantee likely - Asset-based and specialist lending
Invoice factoring
A finance company pays you most of the value of your unpaid invoices straight away, then collects payment from your customers and pays you the rest, minus its fees.
DaysPersonal guarantee likely - Asset-based and specialist lending
Selective and spot invoice finance
Get paid early on just the invoices or customers you choose, instead of your whole sales ledger. Useful for occasional cash gaps and smaller businesses, but each invoice costs more than a full facility.
Days - Asset-based and specialist lending
Stock and purchase order finance
Finance to pay suppliers for stock, or to fulfil a large customer order, repaid when the goods are sold. It lets you take on bigger orders, but fees are high and the money can only be used for those goods.
Weeks - Alternative and fast debt
Peer-to-peer business lending
Borrow from many individual and institutional investors through an online lending platform regulated by the FCA, instead of from a single bank.
DaysPersonal guarantee likely
- Asset-based and specialist lending
- L4
Expensive or fast
Quick to arrange, often unsecured, and usually the most expensive way to borrow.- Alternative and fast debt
Revenue-based finance
An advance repaid as a fixed share of your future sales, plus a flat fee agreed up front. Repayments fall when sales are slow, but the fee can make it expensive, especially if you repay quickly.
Days - Alternative and fast debt
Short-term unsecured business loans
Fast loans from online and specialist lenders, repaid over one to 12 months, with no assets needed as security. Quick to arrange, but interest and fees are high and owners usually have to give a personal guarantee.
DaysPersonal guarantee likely
- Alternative and fast debt
Worth knowing
- Agree payment terms in writing before you start, and send each invoice as soon as the work it covers is done.
- Ask invoice finance providers how they treat work billed in stages, on a retainer or on timesheets before you apply.
- If you plan to sell the business or hand it to your team, the guide on selling or stepping back covers management buy-outs and employee ownership.
Sources
- GOV.UK: Late commercial payments: charging interest and debt recovery · checked 21 October 2026
- GOV.UK: Check when large businesses pay their suppliers · checked 21 October 2026
Facts about each route are sourced on its own page.