If you are looking to open a small business, this is definitely the case. Getting your small business ideas organised can be crucial to getting you through the beginning stages. Whilst there is plenty to be said about the benefits of getting your concept and brand image sorted, there is also plenty to be said about something more daunting: financing your small business. 

 

Whether you want to open a small business or you’re down the road of small business ownership and looking to expand, read on for a quick round-up of getting started with small business finance UK…

The Work Before The Work Of Small Business Finance

 

Before you look into a small business loan or any type of small business financing, you need to take the first step towards starting a small business - the planning. Even if you’re already a functioning SME, planning ahead is a must-do financially for small businesses. 

 

When considering money, you need to work out how much you need, why you need it, and some buffer room for unexpected expenses; this needs to include starting costs. There’s no point jumping into a loan request or borrowing when you don’t fully understand what you need. A solid business plan provides a strong foundation to build upon and makes sure you go into any big financial decisions with the clear head and plan you need to get you to the next step. Not to mention, investors or banks will want to see that you know what you’re talking about with forecasts, market research, and repayment strategy. Additionally, you’ll want to make sure you have a good understanding of your personal and business credit rating. 

 

So, whether you’re starting, started, or looking to expand your small business, knowing the ins and outs of your finances is a must before acquiring any small business funding. Don’t rush whilst making a large investment or financial decision, there’s nothing wrong with taking it slow and steady. 

 

Your Small Business Finance Options 

When it comes to acquiring a business loan or small business funding, you have more options than you might initially think. With different degrees of risk, capital, and interest, here are just some small business finance options that might work for you. Some options may be better suited for those starting off, some may be better for those already established and looking to grow. You may be able to mix and match your small business finance options too. Here are some possible routes you could take for pursuing small business funding. 

 

• Grants & Government Schemes 

 

Before you look at loans, consider if a grant or government scheme would be useful for your goals first. 

 

For some sectors and types of businesses, there are available grants offered. With just how varied small business ideas can be, it’s worth researching through a selection of grants and seeing if any could work for you. Places you could begin your search include Local Enterprise Partnerships (LEPs), local councils, and checking the government website if you happen to be based in Scotland, Wales, or Northern Ireland. Even if it only covers partial costs, an extra helping hand is always worth some exploration! 

 

• Banks & Loans

Banks and loans are likely where your mind initially goes to when considering business funding. There are a few different ways this can be approached however, and different avenues have different impacts.

 

Traditional banking doesn’t need too much explanation. Loans are offered for businesses, alongside overdrafts and credit cards, all with clearly-set repayment terms and interest rates. They rely on your credit score and can sometimes even need a guarantor or collateral. 

 

A less discussed option is Challenger banking, often providing easier access to business accounts and credit lines, sometimes even specialising in business banking. Challenger banks are newer on the scene, prioritising online services and aiming to challenge more established banks. 

 

Each type of banking has their strengths and weaknesses, make sure to commit to researching your options before making a decision. 

 

Did you know that small businesses can apply for a Start Up Loan via the British Business Bank if they’ve been trading for under 3 years? This loan can reach up to £25,000 per director with a fixed interest rate and free mentoring. 

 

Regardless of your choice of bank, build relationships with bank employees that you deal with regularly, especially your advisor if you get assigned one. 

 

• Investors & Crowdfunding 

 

There are other methods of increasing or gathering finance for your small business. 

 

You could find an investor. Investors will invest money in exchange for equity. The UK has tax relief schemes for investors that make startups attractive. However, certain investors have explicit interest in finding small businesses that are already established, investing, and mentoring so the business reaches its full potential. They can be an excellent source of financial input, accelerate your small business growth, and provide useful expertise and networking opportunities. However, working with an investor can bring added pressure, as they will want oversight of your business decisions. 

 

There is also the crowdfunding option. It may not work for everyone, but it really does work for some. There are two main ways in which crowdfunding can work. 

 

Firstly, there is crowdfunding with a reward incentive. This may include pre-ordering a product or getting a unique version of a product, essentially investing by paying extra and early out of belief in or desire for your product. Secondly, there is equity crowdfunding. Instead of purchasing a product in advance, equity crowdfunding allows investors and members of the public to buy shares in your business on a mass scale. Different platforms for equity crowdfunding offer different pros and cons so, while reward crowdfunding can be a lot more straightforward, make sure you fully understand the implications before pursuing equity crowdfunding. Crowdfunding has benefits and downsides too, with less reliability than other forms of small business funding. 

 

What’s Your Next Step?

 

Your next step could include one or more of the above, or it could be a different method entirely. However you choose to take your next step, whether it’s the above or via a whole different direction, there are plenty of options for bringing your small business ideas to life. For extra information and assistance, visit the British Business Bank finance hub here. 

 

For businesses looking to grow, The Business Show UK holds so much potential. It’s the perfect place to be for businesses looking to scale or start, giving you the chance to maximise your outreach and make your name known in the B2B scene. Find out how exhibiting can benefit your business here - and join us in 2026.