My business is growing fast and needs money to keep up
Ways to pay for growth once you are trading, from loans and invoice finance to investors, cheapest first.
Growing fast uses cash: more stock, more staff and more customers who have not paid yet. A business can run out of money while sales are rising.
Borrowing keeps you in full ownership but has to be repaid from what the business earns. Selling shares brings in money you do not repay, and expertise, but you give up part of the business and some control. Many growing businesses use both, for example invoice finance for the cash gap and investors for the big steps.
28 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 - 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
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. - L2
Mainstream secured debt
Standard borrowing from banks and mainstream lenders, often secured on assets or backed by a personal guarantee.- Government-backed and community lending
British Business Bank regional investment funds
Government-backed funds for smaller businesses in each nation and region, offering loans from £25,000 to £2 million and equity up to £5 million through local fund managers. Terms are commercial, not subsidised.
Weeks£25k to £5mLoans, or shares if you choosePersonal guarantee likely - Government-backed and community lending
Development Bank of Wales
The Welsh Government's own development bank, offering loans from £1,000 to £10 million and equity investment to businesses based in Wales or moving there. Loans are priced on risk.
Weeks£1k to £10mLoans, or shares if you choosePersonal guarantee likely - Government-backed and community lending
Invest NI loan and equity funds
Loan and equity funds backed by Invest NI, Northern Ireland's economic development agency, from small business loans of £10,000 to equity rounds of up to £2.5 million. Each fund is run by a private fund manager.
Weeks£10k to £2.5mLoans, or shares if you choosePersonal guarantee likely - Government-backed and community lending
Scottish National Investment Bank
Scotland's public development bank, which invests £1 million to £50 million of long-term debt or equity in businesses and projects that serve its missions: net zero, places and innovation.
6 months or more£1m to £50mLoans, or shares if you choose - Bank and mainstream debt
Asset refinance and sale and leaseback
Raise cash against equipment, vehicles or property the business already owns, and keep using them. The lender takes ownership until you have paid it back, and can take the asset if you do not.
Weeks - 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
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
- Government-backed and community lending
- 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
Mezzanine and private credit (larger companies)
Tailored loans from specialist funds rather than banks, for established companies, often for acquisitions, expansion or refinancing. Flexible and larger than bank lending allows, but more expensive, and mezzanine can turn into shares if you cannot repay.
MonthsMay give up shares - 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 - Asset-based and specialist lending
Venture debt
A loan for fast-growing companies that are already backed by venture capital, used to stretch the money from an equity round further without selling more shares.
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
E-commerce and payment platform finance
Online shop and payment platforms offer funding based on your sales through them, repaid automatically as a share of those sales. It is quick and simple to get, but only open to their own sellers and the fixed fee can be costly.
DaysFrom £1k - 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
- Equity rungs. These routes cost no interest, but you give up part of the ownership and control of your business. They are ranked by how much you give up, not by a made-up interest rate. Over time, equity can be the most expensive money of all.E1
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.- Crowdfunding and community finance
Equity crowdfunding
Selling shares in your company to many investors, often including your customers, through an online platform authorised by the FCA.
MonthsGives up shares - Hybrid instruments
Advance subscription agreement (ASA)
An investor pays now for shares that the company will issue later, usually at the next funding round. If set up correctly, it can qualify for SEIS or EIS tax relief, unlike most convertible loan notes.
WeeksGives up shares - Hybrid instruments
Convertible loan notes (CLNs)
An investor lends money to your company on the understanding that the loan will usually turn into shares later, often at a discount, when a set event such as the next funding round happens.
WeeksMay give up shares
- Crowdfunding and community finance
- E2
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.- Private equity investment
Angel investment
Experienced individuals, often investing together as a syndicate, buy a minority stake in an early-stage company and give advice and contacts as well as money.
Months£5k to £500kGives up shares - Private equity investment
Corporate venture capital
A large company invests in a smaller one that could help its own business, in return for shares. You get money plus the corporate's contacts and know-how, but you share your ideas with a possible competitor.
6 months or moreFrom £1mGives up shares - Private equity investment
Family offices and wealthy private investors
Wealthy families, often through a private company that manages their money (a family office), invest directly in businesses. They can be more patient and flexible than funds, but there is no standard process and they are hard to find.
6 months or moreGives up shares - Private equity investment
Venture capital
Professional investment funds buy minority stakes in young, high-growth companies, usually in several rounds, and expect a large return when the company is sold or listed.
6 months or moreGives up shares
- Private equity investment
- E3
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.
Worth knowing
- Work out how much of the growth is a cash gap, which borrowing can cover, and how much is a long-term bet, which may need investors.
- Raising money takes months. Start before you need it.
- Read the terms on control, such as investor vetoes or loan covenants, as carefully as the price.