What is Small Business Finance and Why do I Need it?

Like many businesses around the UK, every day we question ourselves on how we can get more business. When businesses start, the budgetary constraints can lead to the business losing momentum. In essence, what we are actually referring to is the correct level of financing and business strategy.

It is inherently important for any business looking to grow and perform, that the business has a plan and constantly analyses it’s progress. The next consideration then, does your business have the correct level of funding? Funding a business correctly allows it to position well in the market, along with ensuring strong cash flow to support the plan until it is achieved.

Remember, every business starts as a small business! (See below for funding options.)

Small Business Finance & Capital

How much of the country is made up of small businesses?

There are 5.9 million small businesses in the UK alone, with 660K start-ups joining the figures each year. 60% of the employed populace are employed by small businesses and 60% of start-ups fail.

Do you believe you will fail? While these figures highlight the stark realities, there are not many that believe they will fail, I mean why even start a business if you think it will fail. The truth is with a concrete strategy, correct funding and business support you have every tool in the kit to provide you with what you need for success.

Reasons for small business finance?

When we talk about why we finance a small business, it is generally for three reasons:

  • Seed Funding refers to the initial/starter round of finance package, enabling the business to start operating with the  correct amount of finance capital..
  • Cash flow funding refers to the finance requirement to pay bills due today that you know you can pay back later. This generally refers to gaps between funds coming in and going out.
  • Expansion funding refers to the nature of investing more cash in order to scale the business up and reap the rewards of doing so.

What types of small business finance are there?

There are many types of funding and each one is has its own positives and negatives:

Angel Funding/Private Investor refers to a private individual that invests to secure transferable debt or long term equity from the business. For those that are looking for less input and more investment, the Angel funder can be the best finance option.

Venture Capitalists are the gunslingers of the funding game. They can be early investors but generally come in later down the line and are known for the mentality to be the higher risk, higher return investments. They have access to equity markets therefore high levels of finance and this can be hugely beneficial for both sides. Requiring a huge ramping up of service VC’s look for companies that have the ultimate business potential.

A Business Loan is your most common type of Small business finance. This can cover lenders, to banks, Asset managers to invoice  financing and cash flow loans. This is most common because it generally means a simpler transaction, entailing the creation of debt to be repaid with interest – nothing more, nothing less and mostly to do with original risk-return matrices. The government is offering the Coronavirus Business Interruption Loan Scheme (CBILS) during the pandemic, this is available in two days and is a great option for those that have been affected by COVID-19 (

Crowdfunding which is the process of obtaining generally smaller amounts of funding from a large number of people. Because of the volume, these finance options are generally technology based solutions and are seeking either reward, donations or equity for funding. Whilst this is the simplest from an investor perspective it requires propositions that are innovative and forward thinking, less investor based strategies and more of a retail offering.

Whatever the reason for small business finance, they are all extremely valid. Your job as a small business owner/operator is to make sure you take advantage of the funding options – while the landscape for finance at this time may seem reduced, the opportunity remains and we must take advantage of each one of them.

Can I get funding for my small business?

The answer is yes! There are many that don’t consider funding as an option, or that it is beyond their reach, outside their scope. However as we discussed, the world of business revolves around opportunity. If your proposition & strategy is strong enough then the investment is secondary.

All small businesses look for funding at some point, as much as we believe we can do everything ourselves, as you start-up or begin to scale your business, you naturally want to get the most from your efforts. To get the most out of your business, you have to give it the chance to strategically ‘stretch its legs.’

At Savants we work closely with you from the start and throughout your journey, ensuring you have the best chance at success. From your business plan through to your financial modelling and ongoing management, we will ensure you are prepared if you are not already.

Our financing options are unrivalled, from our SME network to strategic partnerships, we work with the UK’s largest small business finance provider, enabling us to provide a quote to every business from those in a good credit position to those that are not. Our 98% acceptance rate speaks for itself and 40+ lenders means we cover every possibility. Having loaned over £1 billion to SMEs we are confident we can find a solution for you!

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