How and from where are you funding your business?

It’s been a finance heavy week. From visiting UK Finance for the SME Forum to get updates on the latest lending stats, to meeting members of the Finance & Leasing Association who specialise in asset backed finance, I read in The Times that ‘challenger banks and specialist lenders accounted for 60 per cent of lending to small businesses last year – a reversal from 2012, when the main banks dominated 61 per cent of the market.’

Something is going on in the world of finance; small firms are taking out more loans and doing so from different sources.

I can often be found saying that the best form of finance for any business is existing cashflow (which is why it’s important to get paid on time) but when it comes to the type of external finance available to your business, here are five options.

• StartUp and growth loans – if you are looking for a loan to get started in business, StartUp Loans is a good place to start. Backed by the British Business Bank, the loans are personal and have been expanded (since April 2026) to be lent to businesses that have been trading for up to 5 years. To access grow-on loans local to you, look for your Community Development Finance Institution – these organisations are flourishing when it comes to amounts being made available to them to lend on to small firms. Both options come with in-built support so you can borrow money and get advice to wisely deploy it.
• Working capital – growing in popularity due to ease of access, this form of funding is getting to small firms via service providers (eg point of sale providers) or possibly the marketplace on which you are trading as they can lend based on visibility of how you are performing as a business. Paying back the loan is often a percentage of future sales so suits businesses who want a flexible funding option.
• Asset finance – as the name implies, this is finance to help a business buy necessary equipment and to do so by leasing it or using hire purchase. It is a growing part of the SME lending market with more than £24 billion lent in this way in 2025. There is a useful guide here explaining asset finance and the options available.
• Export finance – for growing businesses that are expanding into new markets, UK Export Finance is on a mission to support more small firms with its loans that come with a government guarantee and offer credibility to small businesses when pitching for large overseas contracts.
• Equity investment – from securing angel investment through to investments from regional funds, there are many options available when it comes to raising funding in exchange for equity. British Business Bank powers many of these with its equity programmes and Nations and Regions Investment Funds.

Back to those latest stats on SME lending that I referred to at the start, they show an increase in the amount of lending in the first quarter of 2026 as shown in the green ‘gross lending’ line in the article image above. Let’s hope this line keeps moving north as a sign of small businesses going for growth, and if funding is part of your plan in 2026, I hope you find the right source and type.

Emma