I'm a sole trader or in a partnership
The ways to raise money that work without a limited company, cheapest first.
As a sole trader you are personally responsible for all the debts of the business. That matters when you borrow: what the business owes, you owe.
Without a limited company you cannot sell shares, so the routes here are loans, grants and other ways that do not cost you ownership. Some business loans of £25,000 or less to sole traders and small partnerships are covered by consumer credit rules, which the FCA regulates. Loans to limited companies, and business loans above £25,000, are outside the FCA's remit.
30 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 - Crowdfunding and community finance
Donation-based crowdfunding
People give money to a cause or community project through an online platform and expect nothing back. It costs nothing but fees and effort, but it only works for projects people want to support.
Months - Crowdfunding and community finance
Reward-based crowdfunding
People pay in advance for a reward, often the product you plan to make, through an online platform. You give up no shares and repay nothing, but you must deliver what you promised.
Months
- 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 - Government-backed and community lending
UK Export Finance General Export Facility
UK Export Finance, the government's export credit agency, partly guarantees your bank's finance so exporters can get working capital and trade finance facilities more easily.
WeeksUp to £25mPersonal guarantee likely - 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
Asset finance (hire purchase and leasing)
Spread the cost of equipment, vehicles or machinery over time through hire purchase or leasing, instead of paying for it all up front.
Weeks - 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
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
Commercial mortgage
A long-term loan secured on business property, to buy premises you will use yourself or rent to another business.
Months
- 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
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 - Asset-based and specialist lending
Trade finance (letters of credit, bonds and trade loans)
Bank products that help businesses buy from or sell to other countries: guarantees that you will be paid, bonds your buyer may ask for, and short loans to pay suppliers. They reduce the risk of trading abroad, but they are complex and usually need a track record.
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
Bridging loan
A short-term loan, usually secured on property, that "bridges" a gap until longer-term money arrives, such as a mortgage or a sale.
Days - 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
Merchant cash advance
A lump sum for businesses that take card payments, repaid automatically as a share of each card sale until the advance and a fixed fee are paid off.
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
- Keep business and personal money in separate accounts. Lenders find it easier to read.
- Lenders will look at your personal credit file, so check it first.
- If you plan to take investors later, a limited company is the usual way. Changing structure has tax and admin effects.
Sources
- GOV.UK: Set up a business: choose a legal structure · checked 10 October 2026
- FCA: FCA sets out steps to support small businesses' access to finance (17 September 2026) · checked 10 October 2026
Facts about each route are sourced on its own page.