What Funding is Available for Small Businesses?

There’s a lot to consider when setting up a new business legally and operationally, especially SMEs that are in the very early stages. From where you want to set up your start-up to the employment laws that could affect you, each consideration must be planned out carefully to make sure every box is ticked.. 

One area that’s crucial is funding. Whether you’re just at the beginning of your SME journey or you’ve been established for a while, having the right financial backing in place is key to making sure your business succeeds.

To help you weigh up your options, here’s a look at some of the key financing routes you can take. 

Friends and family

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Asking family members and trusted friends for a financial boost is a common choice, especially if a business is in the very early stages. There are lots of reasons why this is a popular option for budding entrepreneurs, such as avoiding having to deal with banks and the interest rates that come with bank loans. Plus, those close to you are more likely to be sympathetic if your business doesn’t work out. 

But there’s a chance that borrowing money from those you care about will sour the relationship – and this can have lasting damage. If you follow this funding path, it’s important to treat the situation as you would if you were dealing with a bank. 

Keep the use of the money clear, too, so that the family member or friend knows where the money is going and whether you’re treating it as a loan that you’ll pay back, or the investment is being exchanged for equity

Bank loans

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Bank loans are another popular option. There are lots of opportunities that banks provide for small and fledgling businesses, so make sure you do your research to find one that fits your plan. 

Compare the different deals that are available to you, ensuring that you are realistic about whether the interest rate is affordable, and that you can make the repayments. Also, be ready for this process to take a while. Banks will need a full business plan from you and may carry out credit checks – and all of this can take time. 

Specialist lenders

It’s possible to take out a loan without having to deal with the banks. In particular, unsecured business loans from dedicated lenders are a worthwhile consideration should your business be a little more established and you need a financial boost to take it into the next phase. 

Unlike a secured loan, an unsecured business loan isn’t backed against an asset, making it a possible funding option for new businesses that don’t have any assets yet. They’re also a quick finance option as there are less stages of the application to go through than for a secured loan, making it ideal if you need cash quickly to move the business forward. 


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Crowdfunding has become an incredibly popular funding option in recent years. Using dedicated online sites, the general public either lend you the money as a form of peer-to-peer lending or take their own stake in the business in the form of shares or equity. 

This can be time consuming as it requires lots of publicity for your idea to generate attention from potential lenders and the target can take a while to reach, but by sharing the financial load between many, there’s a chance you can get a good deal. 

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