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Haines Watts Esher Phone icon 020 8549 5137

Finding the right route to fund a business can be challenging, and knowing where to start can seem impossible.

Daniel Morgan, lists just a few options that SMEs can consider when looking to fund a business.


Traditional vs challenger banks

Banks have become stricter about their lending and getting approved through a traditional bank can be difficult. There has been a definite shift with banks preferring to extend loans to larger businesses while increasingly cutting back on loans for smaller companies.

However, there are now ‘challenger banks’ disrupting the market and offering alternatives for SMEs seeking funding. Whilst traditional banks may come with systems and processes that feel slow and behind the times, challenger banks tend to be smaller and more adaptive, utilising the latest technology to service their customers.

This often means that decisions on finance and the release of funds is quicker than the high street alternative. These banks can also save you time as without physical branches, you can access their services online, from anywhere.

Business loans are a good option for both short-term and long term lending, and can be effective for business expansion or rolling out a five year plan. The main advantage of a bank loan is whilst you will pay interest, you will not sacrifice shares in the company or a percentage of the profits.

Finance for the purchase of equipment is always worth considering, as lenders are keen on this type of lending, with plenty of options available with appealing rates.


Utilising your business’ cash flow

Releasing any excess cash into your business can be an effective way to fund upcoming projects. You could consider invoice financing to free up cash flow.

Invoice financing involves borrowing money against the amounts due from your customers. Doing this can allow you to reinvest in the company far sooner than if you’d had to wait for your customers to pay. This type of funding is very popular, as the funding goes up and down in line with your sales activity, therefore lenders prefer this to more typical overdrafts. This area also has lots of “challengers” in the market, offering tech solutions.

However, borrowing money and increasing the company debt can be risky if you haven’t done proper financial forecasting. Plan for what would happen if your growth were to slow to ensure that the loan remains affordable in the long term.


Government initiatives

If your business is involved with anything that could be deemed research and development (R&D) then you will be able to reduce your tax bill and you may be able to receive a refund for any prior tax payments made.

It is important to consider how attractive funding your business may be to investors. The government runs venture capital schemes to help small and medium sized businesses grow by attracting investment.

These schemes offer tax reliefs to those who buy new shares, bonds or assets in your business for a specific amount of time. However, while this is an option for businesses in most industries, there are exclusions. There are also limits on the amount of money you can raise depending on which scheme you qualify for.

This can be a particularly useful scheme for tech companies, as higher limits can be implemented for those who carry out R&D or innovation in their business.


Working with your business advisors before seeking funding can help with running clear forecasting and advice on which method of financing will work best for you and your business.


Talk to our team of Surrey Accountants about the best route to fund a business.

Want to know more? Call us on 020 8549 5137 or email

About the author

Daniel Morgan

Dan joined Haines Watts in 2011. While he works across many sectors, he has a particular expertise and interest in the property, hotel, technology and media sectors and in advising professional service firms. Dan works primarily with owner managed businesses. While he delivers a range of accounting services, he thrives on providing strategic consulting focused on helping owners realise value in and from their businesses. Dan sees one of his core roles as being a sounding board for the business owner; a trusted confidant who can challenge and question but also support the owner.


The most enjoyable part of what I do is working with business owners on their long term plan and future goals. It's so rewarding to be part of creating that strategy and helping them achieve the desired outcome.

If I wasn't doing this I'd be: a pro golfer.

Favourite Sports Team: Manchester United.

Dream Location: Tuscany, drinking red wine.

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