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 Small Business Finance UK
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Welcome to Small Businesses Finance UK

Small Business Finance provides help and guidance for entrepreneurs looking to start up a small business whether part time or a home office. You will find articles on small business plan best practices, how to find investors to invest in your business idea, information on funding, grants and loans to get your small business the kick start that it needs and much more.
  •   Find the most effective ways of generating finance for your small business.

  •   Find UK's top Angel Investment Networks that can help you find angel investors.

  •   Equip yourself with vital information about tax, insurance and getting started.

Articles Contact Small Business Finance

Small Business Insurance

Small Business Plan

Small Business Advice


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Featured article Important UK resources
Small Business Loans

There are 3 forms of small business loans:

  • Short term loans – Provided for a period of 1 year, or less, these loans provide money to businesses which want to start immediately.
  • Intermediate loans – Provided for 1 to 3 years, these small business loans cover large initial expenses of a business.
  • Long term loans – Provided as capital for startup businesses, loan periods extend from 3 to 7 years.


Small Business Software

Technology plays a vital role in business administration and maintenance.  An increasing number of businesses today are applying business softwares to ease business processes. Small businesses are no exception. Small business software forms an essential part of home-based projects or small companies.

Business software can be described as sets of programs and applications that can be used in businesses to help business activities and increase productivity. While large businesses can tailor-make business softwares to suit their needs, medium to small sized businesses bank largely on small business software.


Small Business Finance UK

Since the rise of the global economic market, there has been remarkable growth in number of companies. As new ventures continue to sprout, and existing businesses expand, the industrial market becomes highly competitive. While it stimulates established companies to attain new heights of success, it also causes most young and early-stage companies to experience great difficulty in surviving. Without substantial financial assistance to take care of their key business requirements, many startups struggle to remain open. Fortunately for novice entrepreneurs today, small business finance provisions are readily available from outside investors.  

Who Can Apply for Small Business Finance?

  • Small business finance can be acquired by startup firms that have limited operating experience in their relevant industrial sectors.
  • Most new businesses, at their start, are either too small, or too young to seek financial help from the capital markets. These businesses can turn to small business finance support from venture firms, business angels, banks loans, or Government grants.
  • As part of a highly specialised and competitive industrial family, most young companies require sufficient time to build their operating history and be recognised as part of the commercial market. A good operating history and market value will help businesses acquire large quantities of capital from wealthy institutions and venture firms. As startup funds provided, small business finance is the first step towards obtaining money for future growth.
  • Lack of market expertise and value services can hinder capital acquisition from banks. Small business finance can be acquired by such companies to compensate for lack of business loans.
  • Many companies in their early stages of development are unable to complete their debt offering. Small business finance acquisition for such companies is highly beneficial.

Small Business Finance – Points to Remember
Most small business owners struggle to obtain finance for their companies at some point or the other. There are several factors deciding whether or not a business owner is capable of acquiring capital for his/her business. A few vital points that should be remembered when applying for small business finance are:

  1. Capital acquisition does not mean securing more funds than is needed to meet business requirements. The amount of funds secured by a business will be determined by its need to cover immediate costs and depend on its sales projections.
  2. Young, early-stage companies are generally more susceptible to shutdowns than established firms. Because of this reason, they are considered high-risk ventures by investing companies and funding institutions. Reducing the risk of investments for investors is crucial to acquiring small business finance.
  3. Investors like to be assured good returns on invested capital. An effective business model is one that includes details of company structure, skills and processes to prove it can successfully run a business.
  4. Since investors target profits on investments, companies showing potential for high growth and expansion are likely to attract more finance for businesses.
  5. It helps to publicise businesses through advertising and gain visibility in the commercial market.  The wider the range of audience covered by a business, greater is its possibility of sales and profits.

Where to findSmall Business Finance?

Venture Capital:  Venture capital funds usually come from institutional sources. Venture capitalists contribute their finances in dedicated venture capital firms. Pooled capital is organised as limited partnerships, reserved for investment in later-stage companies with profit prospects in three to seven years. Companies seeking venture funds are required to have the following:

  • A strong business plan with high-growth potential.
  • A well-developed business strategy projecting rapid growth.
  • Availability of new, advanced and innovative business technology.
  • An experienced and skilled team of professionals with good market knowledge. A competent management with ability to execute fresh and creative business ideas.
  • Clarity in business communication and transparency in business practices. Companies should be able to provide an accurate account of all business situations.

Most start-up companies however, fail to fulfill the above criteria, and hence lose out on venture capital for their businesses. This is where angel investors step in.

Angel Investing: Angel Investors are ‘cashed-out’ entrepreneurs who invest their personal funds in start-up companies. Angels aim to mentor new entrepreneurs and actively engage in the management and marketing of businesses they back. Business angels focus on companies in their first stage of development, and are more likely to forgo some of the minor faults existing in business planning and company management.

Angel Investors devote finance towards young companies in exchange for ownership equity or convertible debt. Their aim is to earn higher profits than returns earned from traditional investments.

Small Business Grants: These are usually offered by the UK Government. Grants offer small business finance without expecting repayment of the granted money. Companies that invest personal finance are required to match funds.

Bank Loans: Before seeking small business finance from banks, an entrepreneur need improve his/her personal credit history. Before loans are sanctioned, banks check personal credit score to determine a business owner’s eligibility for funds. Entrepreneurs can improve their credit score by using credit to obtain personal loans towards acquisition of business loans. Banks are also partial to companies showing an impressive business credit. A good business credit can be built if companies obtain business credit cards, or develop good loan payment histories.

The ultimate aim of loan applications is to make a good impression on banks providing small business finance. Banks conduct a thorough research on businesses seeking loans as seed money or expansion funds for companies. When applying for small business finance from banks or other funding institutions, it is important to come prepared with a good credit history and the right documentations.

Before submitting a loan or small business finance application, it is advisable to consult financial experts.  Financial consultants have a good understanding of how businesses work. They can detect financial difficulties in a business and advice entrepreneurs how to acquire small business finance that will fulfill specific business requirements.

Other Loan Services:

  • Small Firms Loan Guarantee Service is provided to companies lacking securities to produce for loan acquisition through normal loan channels.
  • Community Development Finance Initiatives (CDFI) provides small loan amounts for all types of businesses, irrespective of the credit history of a business.
  • The Carbon Trust provides loans between £3,000 and £400,000 at zero percent interest rate, payable over a 4-year period.
  • The Prince’s Trust is designed for individuals between 18 to 30 years who are unemployed or working less than 16 hours a week. The program provides small business finance up to £4,000 (£5,000 for partnerships), and supports business ideas.

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