Require Immediate Support? Helpline 0800 056 0410

What are the best funding options for start-up businesses?

PUBLISHED ON: 30/07/2023

How should I select the right funding for my start-up company?

Start-up business funding helps new businesses to gain a firm footing in their market. It’s important to consider alternative lenders alongside the ‘traditional’ option of your bank, however, as they may provide additional flexibility that benefits your business at this stage.

UK Business Finance are business finance brokers and we help start-ups to find the best form of finance by taking a whole-of-market approach. So what types of funding can be a good choice for start-up businesses?

Start-up business loans

Start-up business loans can support your business at this early stage, providing the funds for a range of purposes, such as investing in new equipment, purchasing stock, or perhaps taking on additional staff.

Loans can be secured or unsecured and you repay over a fixed term, which can range from several months to years. Specialist lenders tend to be more flexible in lending to start-up businesses when compared with the high street banks and are particularly relevant when there is only a short trading history to rely on.

Invoice finance

Invoice finance may be a good option as it allows for the release of cash from invoices without having to wait for your customer to pay. Typically, around 90% of invoice totals are paid out within 48 hours with the remainder being sent (minus the financier’s fee) once your customer has settled the invoice.

Factoring is a specific type of invoice finance whereby the credit control function of your business is managed by the financier. This can be a significant advantage given the time commonly required to chase payments.

Other similar options include invoice discounting and single/spot invoice finance. Invoice discounting is a confidential form of invoice finance where you manage your credit control function in-house. Single invoice discounting allows you to select certain invoices against which to raise finance.

Equipment finance

Start-up equipment finance helps your business gain access to expensive equipment that’s essential for day-to-day operations. It spreads the cost of the asset(s) as you pay affordable amounts over a fixed period.

Equipment leasing is one type of flexible equipment finance. At the end of the term, you might decide to upgrade the equipment, for example, or extend the lease. If you prefer to own the equipment ultimately, however, hire purchase may be a preferable option.

There are also tax benefits available as equipment lease repayments are tax-deductible. If you take out an equipment hire purchase you could be eligible to claim capital allowances when you take ownership of the asset.

With so many funding options available to start-up businesses it can be difficult to know where to start. UK Business Finance are highly experienced commercial finance brokers and can access the whole of the market to arrive at the best funding option for your start-up.

Our no-obligation services are free of charge and once we’ve established your best options we can make the application on your behalf. Please get in touch with one of the team to find out more.

Contact us for more information

  • Fully Independent
  • Whole Market Access
  • Matchmaking Process