Startup finance

Quick facts

Startup finance is a broad term that refers to any kind of finance (i.e. debt finance, equity finance or grant funding) that a startup business might need in order to launch and grow. It’s sometimes used interchangeably with ‘seed capital’, though startup finance is usually a longer-term arrangement.

Let’s say you’re a startup business. You’ve got a great idea. You might also have a team in place, a business plan, a budget and a figure for the amount of finance you need in order to meet your short-term needs and grow. You might decide you need funding for, say, three years to cover development costs and startup losses. Perhaps you’ll need finance even after you’ve reached break-even point, especially if your business is seasonal.

The good news is that there are lots of options for startup finance, spanning debt finance, grant funding and equity finance from crowdfunding or external investors.

For short-term finance you might consider an overdraft (paying interest only on the amount you’re overdrawn each day), factoring (selling accounts receivable), a credit card, purchase order finance or other types of working capital finance.

If you’re looking for longer-term finance then a start-p loan is one option. There are a large number of lenders (bank and non-bank) who offer loans to startups or new businesses.

You might find, however, that your business doesn’t currently meet the lending criteria for a startup loan (or for any longer-term business loan for that matter). Or perhaps you just don’t want to take out a traditional loan. You could instead investigate crowdfunding, peer-to-peer lending, business angels, venture capital and other types of alternative finance. Your business might also be eligible for grant funding or for one or more of the government’s schemes to reduce taxes, e.g.:

  • Tax relief – the government’s tax incentives for businesses in specific sectors, e.g. R&D tax credits and creative industry tax relief
  • Business rates relief – if your business occupies only one property, and the rateable value of that property is less than £15,000
  • Employment allowance – which can reduce the national insurance contributions you pay for your employees by up to £3,000 per year.

Your finance needs will inevitably change as your business grows – as will the types of finance options open to you. It’s worth exploring all options and regularly speaking to a professional before you commit to any financing route. 

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Disclaimer: Swoop Finance helps UK firms access business finance, working directly with businesses and their trusted advisors. We are a credit broker and do not provide loans or other finance products ourselves. We can introduce you to a panel of lenders, equity funds and grant agencies. Whichever lender you choose we may receive commission from them (either a fixed fee of fixed % of the amount you receive) and different lenders pay different rates. For certain lenders, we do have influence over the interest rate, and this can impact the amount you pay under the agreement. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Swoop Finance can introduce applicants to a number of providers based on the applicants’ circumstances and creditworthiness. Swoop Finance Limited is registered with the Financial Conduct Authority as an Account Information Services Provider (reference number 833145). Swoop Finance Limited is authorised as a credit broker under FCA registration number 936513. If you feel you have a complaint, please read our complaints section highlighted above and also contained within our terms and conditions. Swoop Finance Ltd is registered with Companies House (company number 11163382, registered address The Stable Yard, Vicarage Road, Stony Stratford, Milton Keynes MK11 1BN). VAT number: 300080279

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