Business Funding UK: A Complete Guide for Small Businesses
This guide explains how business funding works in the UK, the main types available, who provides it, and how to apply. It is written for business owners who want factual information without sales pressure.
In short: UK businesses can access funding from £5,000 to £1,000,000+ through banks, alternative lenders, or credit introducers. The most common types are merchant cash advances (repaid from card sales), revenue-based finance (repaid from revenue), and term loans (fixed monthly repayments). Most alternative lenders can make decisions within 24–48 hours and fund within 1–3 working days.
Types of Business Funding Available in the UK
There are several types of business funding, each suited to different situations. Here is a factual overview of the main options.
Merchant Cash Advance (MCA)
A merchant cash advance provides a lump sum that is repaid as a small agreed percentage of your daily card sales. When sales are higher, you repay more. When sales are quieter, you repay less. There are no fixed monthly payments.
- Typical range: £5,000 – £1,000,000
- Repayment: percentage of daily card sales (usually 5%–25%)
- Cost: expressed as a factor rate (e.g. 1.2 means you repay £12,000 on a £10,000 advance)
- Speed: decision in 24 hours, funded in 1–3 working days
- Requirements: typically 6+ months trading, £5,000+ monthly card sales
- No fixed monthly payments — repayments flex with your revenue
Revenue-Based Finance (RBF)
Similar to an MCA, but repayments can be based on broader revenue — not just card sales. Some providers assess bank transactions or overall turnover. Suited to businesses with consistent but fluctuating income, including e-commerce businesses without physical card terminals.
Term Loans
A fixed amount borrowed over a set period with regular monthly repayments. Interest is usually charged as an annual percentage rate (APR). Term loans suit businesses that want predictable repayments and can commit to fixed monthly amounts.
Invoice Finance
Invoice finance lets you borrow against the value of unpaid invoices. You receive a percentage of the invoice value upfront (typically 80%–90%) and the remainder (minus fees) when your customer pays. Suited to B2B businesses with long payment terms.
Asset Finance
Asset finance helps you spread the cost of equipment, vehicles, or machinery over time. You use the asset while making payments. At the end of the agreement you may own the asset outright or return it, depending on the type of arrangement.
Not sure which type suits your business?
CapExpand introduces you to lenders from our panel based on your situation. No obligation, no hard credit check.
Check your optionsMajor Business Funding Providers in the UK
The UK has a growing alternative finance market alongside traditional bank lending. Here are some of the established providers that offer funding to small and medium businesses.
iwoca
Business loans and Flexi-Loans
Offers unsecured business loans from £1,000 to £500,000. Known for fast decisions and a line-of-credit product (Flexi-Loan) where you draw down as needed. FCA-authorised.
YouLend
Revenue-based finance
Provides funding based on card sales, typically through payment processor partnerships. Repayments are taken as a percentage of transactions. One of the largest UK alternative finance providers by volume.
365 Finance
Merchant cash advances
Specialises in merchant cash advances for UK businesses. Funding from £10,000 to £400,000 based on card turnover. FCA-authorised.
Funding Circle
Term loans
One of the UK's largest business lending platforms. Offers fixed-term loans from £10,000 to £500,000 with monthly repayments over 6 months to 6 years. FCA-authorised.
Capify
Merchant cash advances
Provides merchant cash advances from £5,000 to £500,000. Established UK provider with a focus on hospitality and retail businesses.
Fleximize
Flexible business loans
Offers business loans from £5,000 to £500,000 with the option to top up existing loans. Provides both fixed and revolving credit products.
LendingCrowd
Peer-to-peer business loans
A peer-to-peer lending platform offering business loans from £5,000 to £500,000. Connects businesses with individual and institutional investors.
High-street banks (Barclays, NatWest, HSBC, Lloyds, etc.) also offer business lending, though approval processes tend to be longer and eligibility requirements stricter than alternative lenders.
How to Apply for Business Funding
There are three main routes to apply for business funding in the UK:
1. Apply directly to a lender
Visit the lender's website and complete their application. You will need to provide business details, trading history, and financial information. Each lender has its own criteria and process.
2. Apply through your bank
Your existing bank may offer business loans, overdrafts, or other facilities. This can be convenient if you have an existing relationship, though approval can take longer and requirements may be stricter.
3. Use a credit introducer
A credit introducer (like CapExpand) reviews your details and introduces you to lenders from their panel that may be suitable. The introducer does not lend money or provide financial advice — the lender makes the final decision. This can save time if you are unsure which lender to approach.
General Eligibility Requirements
Requirements vary by lender and funding type, but most alternative lenders look for:
- UK-registered business
- Minimum 3 months of trading history
- Minimum monthly revenue of £5,000 (card sales or bank turnover)
- Active business bank account
- No active insolvency proceedings
Credit history is considered but is not always a deciding factor — particularly for merchant cash advances, where the focus is on trading performance rather than credit score.
Frequently Asked Questions
What is business funding?
Business funding is any external finance a business uses to cover costs, invest in growth, or manage cash flow. In the UK, the main types include merchant cash advances, revenue-based finance, term loans, invoice finance, and asset finance. Each works differently and suits different situations.
How do I get business funding in the UK?
You can apply directly to a lender (such as iwoca, Funding Circle, or 365 Finance), through your bank, or through a credit introducer like CapExpand. An introducer reviews your details and introduces you to lenders that may be suitable. Most applications take a few minutes to complete, and decisions are typically made within 24–48 hours.
What is a merchant cash advance?
A merchant cash advance (MCA) provides a lump sum to a business, repaid as a small agreed percentage of daily card sales. Repayments flex with revenue — you pay more on busy days and less on quiet days. MCAs are not technically loans and do not charge interest. Instead, a fixed total repayment amount is agreed upfront using a factor rate (typically 1.1 to 1.5).
How much business funding can I get?
The amount depends on your monthly revenue, trading history, and the type of funding. Merchant cash advances are typically based on monthly card turnover — most providers offer between 1x and 1.5x your monthly card sales. Through CapExpand, businesses can access funding from £5,000 to £1,000,000 depending on eligibility.
Do I need good credit to get business funding?
Not necessarily. While some lenders require a strong credit history, others — particularly MCA providers — focus more on your trading history and card sales. Many UK funding providers will consider applications from businesses with imperfect credit, though terms may vary. An initial soft credit check (which does not affect your credit score) is typically used to assess eligibility.
What is a credit introducer?
A credit introducer connects businesses with lenders but does not lend money directly or provide financial advice. CapExpand is a credit introducer — we review your details and introduce you to FCA-regulated lenders from our panel that may be suitable. The lender makes the final approval decision. There is no cost to the business for using an introducer.
How quickly can I receive business funding?
Speed varies by funding type and provider. Merchant cash advances are among the fastest — decisions are typically made within 24 hours and funds can land in 1–3 working days. Term loans may take longer due to additional underwriting. The completeness of your application affects timeline significantly.
What are the main business funding providers in the UK?
The UK business funding market includes established providers such as iwoca (business loans and lines of credit), YouLend (revenue-based finance), 365 Finance (merchant cash advances), Funding Circle (term loans), Capify (merchant cash advances), Fleximize (flexible business loans), and LendingCrowd (peer-to-peer business loans). High-street banks also offer business lending. CapExpand introduces businesses to several of these providers.
Is business funding regulated in the UK?
Business lending in the UK is regulated differently depending on the product. The Financial Conduct Authority (FCA) regulates some business lending activities, particularly those involving consumer credit elements. Many alternative lenders are FCA-authorised or work under FCA-regulated frameworks. CapExpand introduces businesses to FCA-regulated lenders from its panel.
What is revenue-based finance?
Revenue-based finance (RBF) is a type of funding where repayments are calculated as a percentage of your business revenue. Similar to a merchant cash advance, repayments flex with your income. RBF can be based on card sales, bank transactions, or overall revenue depending on the provider. It is suited to businesses with consistent but fluctuating income.
About CapExpand
CapExpand is a UK-based credit introducer founded by Alex Beardsley. We introduce small and medium-sized businesses to FCA-regulated lenders for funding between £5,000 and £1,000,000. Our lender panel includes 365 Finance, YouLend, iwoca, Funding Circle, Capify, Fleximize, and LendingCrowd.
We also provide Dojo card machines as an authorised partner. Our service is free to businesses — we are paid by lenders and Dojo on successful introductions.
Based in Sherwood, Nottinghamshire. Phone: 0333 041 3933. Email: hello@capexpand.com.
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CapExpand is a credit introducer, not a lender. We do not provide financial advice. All funding is subject to status and lender approval. The information on this page is for general information purposes and does not constitute financial advice.