Small Business Funding Options Simply Explained

Written by Swoop Funding

In order to grow, your company is likely to face the need for additional capital, which can be obtained in one of three main ways: equity, debt, or grant. This blog aims to simply explain these options to enable you, as a small business owner in the UK or Ireland, to make better decisions about your company’s financial future.

Equity Finance for SMEs

Equity financing involves the sale of your company's shares, and giving a portion of the ownership of the company to investors in exchange for funds. The proportion of your company that will be sold depends on how much has been invested in the company, and what that investment is worth at the time of the financing. 

In the very early stages of business, the most likely route to equity funding is through Angel investment and those investing through the government’s SEIS scheme, whereby the government provides generous tax relief to investors wishing to support new businesses. If your business is a little more established, generally over two years old and you can show some level of success, you may find interest in EIS investors, venture funds, family offices, and tier one investment. Swoop have written a handy guide to equity finance.

Debt Finance for SMEs

Debt finance is simply the term used for different ways of borrowing money or taking out loans. It is an arrangement between you and the lender to borrow a capital sum on the condition that it is paid back in full at a later date. Interest is accrued on the debt and paid independently of the capital repayment schedule. 

Unlike equity, debt does not involve relinquishing any share in ownership or control of your business. 

In the very early days there are start-up loans available, and you may consider leasing or hire purchase. Beyond this stage there are numerous financing options available – peer to peer, invoice finance, crowd funding, IP funding, asset finance, and merchant finance, to name a few - the most suitable for your business will depend on a number of factors.

Grants for SMEs

Small business grants, although not easy to win, remain one of the best sources of funding available to new, developing and established small businesses. The majority of business grants are funded by national, local or European government to; support key growth regions, stimulate technological advance through research and development, support our ageing society, promote sustainability and clean growth, improve the future of mobility, and to make the economy (local and national level) more competitive in a specific sector. Overall these grant schemes generally seek to empower small and medium businesses to grow the economy and in the process, create jobs.

Grant offerings are opening and closing continuously, making it difficult to keep track, so Swoop’s platform provides constantly updated access to numerous grant providers. Swoop also recognises the specific skills required to fill out grant applications, and provide an expert service in assistance with this. 

Swoop simplifies and speeds up the funding process, matching businesses with the right funding solutions across loans, equity and grants, including the Coronavirus Business Interruption Loan Scheme (CBILS). Identify savings and switch expenditure on banking, FX and utilities through their Open Banking technology. Through a combination of Swoop’s funding experience, superior technology and 1000+ providers, they can assess your needs quickly and match you to the right funding solution. If you’re ready to take your business to the next level then drop them a line and they’ll do the heavy lifting.

By Swoop Funding

Image taken from Swoop