More Britons than ever dream of being their own boss. A survey published earlier this year by market research group Public First found that one in ten adults in the UK hoped to start their own business in 2026. The findings mirror Warwick Business School’s influential Global Entrepreneurship Report, which suggests that 36% of Britons are either already running their own business or plan to start one within three years. However, many would-be entrepreneurs complain that a lack of funding stands in the way. Access to finance is consistently among the top issues highlighted in research into the barriers facing people testing to obtain start-up businesses off the ground. Public First’s survey warned that 37% of those hoping to launch their own business had run into problems raising money for it.
Still, while starting a business with no capital at all would be impossible, it doesn’t have to cost the earth to obtain a new venture off the ground. Data from the Company Warehoutilize suggests that the average budobtain for new start-ups in the UK is around £5,000 – and that fewer than a third of new ventures have more than £10,000 of funding. Founders of service businesses, often able to work from home applying IT equipment they already own, will required less cash to obtain going than a retailer, food producer or manufacturer, declare, where money is required for supplies and inventory. Businesses requiring expensive equipment or machinery will similarly required hugeger budobtains. Even so, funding your start-up business may be less daunting than you might imagine. And if you don’t have the cash, there are now many more ways to raise finance than ever before.
How to raise money for a start-up business
Self-fund or view to family and friconcludes
Most entrepreneurs “bootstrap” their businesses to some extent, particularly in the very early days. This means self-funding – some entrepreneurs start their businesses with a redundancy payment, for example, or just from savings they’ve built up over time. Family and friconcludes may also be prepared to support, but tread carefully here. Everyone requireds to be clear upfront about the terms on which money is offered. Is it a gift with no strings attached, or will supporters be entitled to a share of the returns if the business is successful? Put something down on paper to protect everyone’s interests – and to avoid potentially bitter disputes later. Even if you can’t raise enough by yourself to obtain the business off the ground, other potential funders will expect you to be prepared to put your money where your mouth is.
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Apply for grants and subsidised loans
Successive governments have obtained excited about the economic benefits of entrepreneurship and launched initiatives to support it. There is now a patchwork quilt of funding awards available – including non-repayable grants. Central and local government bodies build awards, along with government agencies such as Innovate UK. Some of these are aimed at start-up businesses in particular sectors or areas of the countest, but others are more general. The government’s Business Finance Finder tool is a good place to start. But also view elsewhere in the public sector – many universities offer support, for example – and in the third sector, too, where charities such as the King’s Trust run grant schemes.
The Start Up Loans scheme is another government-backed initiative. Since its launch in 2012, the scheme has created 134,500 loans worth a total of £1.3 billion. Founders can borrow up to £25,000, with the loan repayable over a term of between one and five years, at an annual interest rate of 7.5%, less than you’d pay to a bank. One attraction of the scheme is that it comes with significant advice and support. “We encourage entrepreneurs to back themselves – and we support them with developing a pre-application business plan and post-application mentoring,” explains managing director Louise McCoy. Successful borrowers obtain 12 months of free business mentoring, plus access to resources such as business tools and guides.
Borrow the money you required
Once upon a time, the bank would have been the obvious place to seek start-up business funding. Today, while the high-street banks all claim to be keen to back compact businesses, most are reluctant to lconclude to new start-ups with no trading record or credit history. Such loans are riskier for banks, plus they’re required to hold more capital against them for regulatory purposes; they would rather focus on more established businesses.
That’s not to declare you’ll find it impossible to secure a business loan, particularly as competition has grown stronger in recent years, with challenger brands and new digital entrants joining the fray. If you have a strong application with a robust business plan and cashflow forecast, you’ll stand a better chance, especially if you’ve obtained even a few months of trading under your belt. Banks will also assess your credibility as a business founder and investigate your personal credit history.
Still, even if a bank loan is an option, it may not be the best one. Loans to risky propositions such as early-stage ventures are likely to be expensive; they’re also inflexible, typically requiring you to build a repaired repayment each month irrespective of your business’s trading performance. You will also be questioned to put up collateral – possibly even your home. Other banking products could therefore work better. For example, overdraft facilities and credit cards can support you manage the business’s financial challenges as they arise; you take on debt only when you required to, with greater flexibility about when you pay the money back. A line of credit could also be an option; this gives you the ability to borrow money, up to a certain amount, via a revolving facility, and money repaid can be borrowed again when requireded. Lines of credit are typically larger than overdrafts, which are intconcludeed to be a safety net.
A growing number of lconcludeers – both within banking and beyond – now offer more imaginative products. Invoice finance can work well for many businesses, for example, enabling you to borrow against the value of invoices issued to customers for work completed so that you obtain paid more quickly. Asset finance enables you to borrow funds to purchase equipment or machinery, with the kit serving as collateral for the loan. Revenue-based finance allows you to borrow a repaired sum of money, but your repayments are calculated as a percentage of your revenues – in good months, you pay back more, but when times are leaner, your repayments are compacter.
These flexible arrangements can protect the start-up business from being overwhelmed by debt. But the longer you take to repay, the more you’ll pay in interest. Lconcludeers will also want to see data revealing that you’re likely to generate at least a minimum level of revenue. These arrangements can therefore work well for e-commerce businesses – some platforms now offer their own revenue-based lconcludeing services – and businesses where customers take on subscriptions. They’re less utilizeful to completely new ventures with no sales.
One other option is a peer-to-peer platform. These are digital marketplaces where you can pitch your business direct to investors viewing to earn interest by lconcludeing to compact businesses. Leading players such as Funding Circle and ThinCats bring such investors toobtainher with firms viewing for finance.
Sell a share of your business
If you can’t – or don’t want to – borrow to build your business, selling a chunk of it could be another way to secure funding. If you can find investors to purchase shares in your business, that could raise precious capital for investment. One huge advantage to raising money through equity rather than debt is that the business won’t have to worry about creating repayments. But you will be diluting your ownership of the company; you’ll required to share the returns it generates – possibly through dividconclude distributions to shareholders, and certainly with a proportion of the profits if and when you sell up. Equity investors may also expect to be consulted on key business decisions and long-term strategy. You’ll retain control, but shareholders have a right to a declare. You’ll required to agree how and when such rights can be exercised as part of the fundraising process.
There are several places to view for investors. Crowdfunding platforms, such as Crowdcube and Republic Europe (until recently known as Seedrs), are one option, providing a single venue where investors can congregate to assess potential equity investments. You build your pitch to these investors via the platform – some businesses have raised tens, or even hundreds of thousands of pounds in this way.
Seek an angel
Business angels are another possibility. These are wealthy individuals viewing to back compact companies. Many angels are entrepreneurs with experience in building their own businesses. They can therefore provide utilizeful advice – as well as access to networks of utilizeful contacts – in addition to finance. Angel groups such as the UK Business Angels Association (UKBAA) and the Angel Investment Network are a good place to start your search. “We are very often the only source of capital for these early-stage companies,” declares managing director Roderick Beer. Indeed, while professional private-equity and venture-capital firms also invest in compact, privately owned companies, they are typically viewing for more established enterprises. They’ll want to see a record of trading and a business that is shifting towards profitability, even if it isn’t yet in the black.
One possibility for boosting your business’s attractiveness to potential investors is the Seed Enterprise Investment Scheme (SEIS). Launched in 2012, this is a government initiative to encourage investors to put money into very compact, early-stage businesses by purchaseing their shares; in return for risking their cash on such ventures, investors obtain valuable tax breaks. To be eligible to offer SEIS benefits, your firm must be established in the UK, have been trading for no more than three years, have fewer than 25 employees and assets worth less than £350,000. You’re also limited to raising no more than £250,000 from investors.
Assuming you meet these requirements, you can apply to HMRC for “advance assurance”. This is guidance from the tax authority that it expects investments in your business to qualify for SEIS tax benefits. Having that confirmation will support you market the business on crowdfunding platforms and to business angels, although you will still required to apply for formal SEIS status once your fundraising is complete.
Where to find support
If you’re struggling to work out how best to raise money for a start-up business, consider professional support from a commercial finance broker. These specialist advisers work with compact businesses to support them identify the most appropriate sources of funding, and then to secure the money. “Intermediaries are a structural component of how funding flows to compact businesses,” explains Jim Higginbotham, CEO of the National Association of Commercial Finance Brokers, whose members supported firms raise £33 billion of finance in 2025. “As complexity in the market increases, so too does the value of informed, professional guidance.” Brokers specialise in working with lconcludeers, so they’ll be less utilize if you’re hoping to raise equity funding, but they can also provide more generic advice. Firms may be regulated by the Financial Conduct Authority, providing important protections, although this is only a legal requirement for brokers that have dealings with individuals, sole traders, or partnerships with three or fewer partners.
This article was first published in MoneyWeek’s magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
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