Generating funds is crucial for SMEs eager to grow as finances can determine the scale, scope and speed of their expansion.

There are a number of funding types on the market but entrepreneurs are often confused when a decision has to be made on what would best serve their growth strategy. And with research showing that almost a fifth of SMEs miss out on opportunities due to lack of finance, it’s vital that business owners are aware of their options.


Getting a loan is one of the most traditional funding options. It will usually involve a business taking funds on a credit agreement from a bank, funding agency or other. Prior to the funds being granted, terms and conditions are set for paying back the loan along with any interest accumulated. This allows a business get a larger investment whilst keeping its shares. However, loans aren’t flexible and interest rates can change depending on the economic climate.

Invoice Financing

Invoice financing is where a business can either sell unpaid invoices to an invoice financer or borrow money against those due to be paid at a later stage. Businesses can trade all or choose one or multiple invoices of credible commercial customers for this transaction. This option will provide much needed funds and free up business owners’ time chasing payments but what has to be considered is that some profit will be lost.

Investment Finance

A popular option driven by such TV shows as The Apprentice and Dragon’s Den is investment finance. With a number of Angel Investment events and support groups across the UK, businesses that have been trading for less than two years can attract up to £150,000 through the Seed Enterprise Investment Scheme. Companies that have been around longer and are looking for considerably more funds can use the Enterprise Investment Scheme which allows investments of up to £1million. However, attracting such investment may mean giving up control over a part of your business.

These are just a few funding options currently available on the market and SMEs can take advantage of other opportunities such as crowdfunding, grants, asset finance and more. If you’d like to discuss your options or find out more about any of the above, get in touch here.

Danny Evans, client manager at Champion Accountants