How to raise finance for a small business
The main ways to raise money are debt (bank loans, asset finance, invoice finance, Start Up Loans) and equity (angel investors, crowdfunding, venture capital, often using SEIS or EIS tax reliefs). The right mix depends on how much you need, what it's for and how much control you want to keep. A credible forecast and up-to-date accounts are what get you a yes.
Your main options compared
| Option | Best for | Watch out for |
|---|---|---|
| Bank or online business loan | Established, profitable businesses | Personal guarantees, arrangement fees |
| Asset finance and leasing | Vehicles, machinery, equipment | Total cost over the term, balloon payments |
| Invoice finance | B2B businesses waiting on customer payments | Fees and contract length |
| Start Up Loans | New businesses under three years old | Personal loan, so you're liable |
| Angel investment with SEIS or EIS | Early stage, high growth | Giving up shares and some control |
| Crowdfunding | Consumer brands with a loyal audience | Public campaign, platform fees |
What do lenders and investors want to see?
- Up-to-date management accounts and filed annual accounts.
- A realistic 12 to 36 month cash flow forecast with clear assumptions.
- A clear reason for the money and what it will return.
- A tidy credit file and no surprises with HMRC.
An accountant who works with funding regularly can prepare this pack, sense-check the numbers, and introduce you to the right type of lender or broker.
What are SEIS and EIS?
They're government schemes that give investors Income Tax relief for backing small, qualifying UK companies. SEIS gives investors 50% relief and lets a company raise up to £250,000. EIS gives 30% relief for larger rounds. Getting HMRC advance assurance before you pitch makes your company far more attractive to angels.
Is One Good Accountant a lender or broker?
No. We introduce you to accountants and advisers who help you prepare for funding. Where a regulated broker or lender is needed, they'll tell you, and you can check any firm on the FCA register.
Frequently asked questions
What's the easiest way to raise money for a small business?
For established businesses an unsecured loan or asset finance is usually quickest. For new businesses, a Start Up Loan is a common first step. Equity takes longer but doesn't need repaying.
How much can I raise under SEIS?
A qualifying company can raise up to £250,000 under SEIS, and investors get 50% Income Tax relief on what they invest.
Do I need an accountant to raise finance?
You don't have to, but lenders and investors judge you on your numbers. An accountant can prepare forecasts and management accounts that stand up to scrutiny.
Will applying for finance affect my credit score?
Hard credit searches can. Ask whether a lender does a soft search first, and avoid applying to lots of lenders at once.
This guide is general information for UK taxpayers and was correct when last reviewed. Tax rules change, so check your own position with a qualified adviser.
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