Business Finance – Finance Options for UK SMEs

Please Note
As a B2B Finance Lender and Broker, we search our panel and provide options tailored to your business and situation. We do not give financial or tax advice, you’ll want to chat with your accountant for that.

Look, business finance is about getting the money you need to grow, plain and simple. You borrow it, pay it back with interest over time, and use it to make things happen. Finance provides immediate capital that is repaid with interest over a pre-defined period. This enables your business to seize opportunities and effectively manage your business cash flow.

The type of finance best suited to your business will depend on what you’re buying, how long you want to borrow the money for, the trading situation and credit status of the business and its directors as well as the monthly payment you can afford.

Business Funding Options can be split into 3 Main Categories…

Business Loans – Providing capital for a wide range of business requirements. Simply borrow cash to be used across your operation.

Asset Finance – Facilitating the acquisition of essential equipment to drive your operations. Acquire new equipment with variations of lease or hire purchase agreements.

Equipment Refinance – Unlocking valuable capital from your existing assets. Refinance your business’s high value items that you already own, using them as security for a loan.

Before covering the detail of each finance option available, we’ll consider why it can be a great way to advance your business growth. If you’re already considering finance, jump straight to 👇 Business Loans.

Why Should I Consider Business Finance?

Finance allows a business to get what it needs right away. Sometimes opportunities arise suddenly, markets change, or growth opportunities open up. Rather than saving cash each month, businesses can get what they need to grow right away, whilst the opportunity still exists. In return, the cash or new equipment allows a business to grow and earn additional revenue whilst making the monthly repayments.

With inflation high and interest rates rising, taking finance now can offer the certainty of monthly budgeting, fixing interest rates at the most competitive level for your business, and buying at today’s prices.

Whilst finance ultimately adds to the cost of a product, a lack of free cash can mean an inability to pay operational costs including staff wages, stock holding or cope with supply chain or payment delays. Buying capital equipment with an overdraft or credit card also uses up what is often seen as a business’s last line of emergency credit and makes it more difficult to obtain other forms of finance later.

Why Think About Finance Right Now? Things move fast in business, that’s why finance can help you…

💡 Jump on opportunities before they disappear.

💡 Lock in interest rates, so you know exactly what you’re paying.

💡 Keep your day-to-day business cash flow healthy.

Business Loans

Business loans can be short-term, medium-term or flexible, they can also be secured or unsecured. Typically, the funds can be used for any business expense, whether that be refurbishment, property costs, operational or stocking costs, covering staff wages or gaps between work and actually getting paid.

Different Types for Different Needs

Short-term loans have terms of less than 2 years and are often used to cover a temporary issue or ride out a difficult trading period. These loans can consist of a merchant cash advance, where the funds are secured against future transactions, invoice financing, where funds are leant against outstanding invoices, a cash injection, or simply a line of credit to be drawn down as you need to use it. Short-term loans generally have less stringent acceptance criteria and quick approvals are more common. 

Term loans usually run from 2 to 6+ years and are often used for projects such as refurbishments, investments that don’t qualify for individual asset finance, to buy an array of different items, or partly to buy equipment and partly to supplement free cash in the business.

Flexi loans are often short-term but with flexible repayment schedules, allowing you to only pay a minimum amount then to overpay however much you can afford, with interest only payable until the loan is settled.

Syndicated deals are the proviso of specialist brokers such as Portman whereby we break your project into component parts and try to get the best type of funding for each element or reach a combined funding total.

Take a look at our Business Loans, Short-term & Flexible loan financing solutions

Startup Business Finance

Often, a new business may need an injection of finance to get off the ground. There may be specific equipment, vehicles, stock (or many other things) you need to be able to deliver your service or product to customers.

However, you need to make money to purchase these. It’s a classic chicken and egg situation. You need equipment to start producing or stock to sell to customers, but you need revenue to pay for the equipment.

A cash injection from a loan works for this familiar problem, allowing you to get started and even scale your business far quicker. Startup loans are a great alternative to other financing options such as credit cards or accessing operational costs. Using up these other sources of funding can inhibit your ability to access finance later.

Brand new businesses don’t always find finance easy to come by due to the lack of trading history. A personal or cross-company guarantee, or other form of security is most often required for a loan. Asset finance can be easier to obtain where a large piece of equipment needs to be bought, as the asset itself is security for a lender. If you are a new start business, you may find buying hard assets on finance easier than going for a straight cash business loan.

Starting Out? Portman can help support your startup with finance.

💡 Get the kit and stock you need to get going.

💡 Avoid draining your emergency funds.

💡 Something to consider – Asset finance might be easier to get when you’re new, because the equipment itself acts as security.

Explore our available Startup Business loans and finance

Asset Finance

Is the equipment you need to grow your business expensive? Would new equipment enable you to grow faster and pay for itself if you could find a way around the significant upfront costs? Asset finance exists to solve this exact problem and could be the perfect solution for you. The vehicles, machinery or equipment you need to take advantage of opportunities often come with hefty price tags. Thankfully, you can split the cost over smaller regular payments through asset finance. 

Assets are generally divided into hard and soft. A hard asset is something that will have a significant value at the end of the finance period, typically machinery and vehicles fall into this category. A soft asset is something that hold less value over time, fitness equipment, technology or fixtures and fittings fall into this category. Alongside your business’s credit profile, the value of the item at the end of the term has an effect on the interest rate at which a lender is willing to provide funds as each asset provides more or less security for the lender.

With asset finance, the lender purchases the equipment and leases it back to the business for agreed ongoing instalments. This allows you to access tools for growing your business at affordable monthly rates without tying up existing lines of credit or using up cash reserved for other purposes.

There are a couple of common types of asset finance. Each has unique benefits, and both can be valuable depending on your situation. 

Discover more from our Asset Finance products

Hire Purchase

Hire purchase is one of the most common forms of asset finance. With hire purchase, you have a guaranteed option to buy the asset outright at the end of the contract, though it does require the VAT to be paid upfront and often a sizeable deposit.

If the equipment will continue to benefit your business, will not need upgrading and will provide lasting value, this may be the best type of asset finance for you. Hire purchase also comes with the ability to claim some capital tax allowances.

Hire purchase is available with an end of term balloon payment, or without, depending how a business wants to structure the payments.

See more from our HP Finance options

Lease Finance

The other kind of asset finance, lease finance, typically involves a lesser deposit and the VAT is spread over the term, making the initial outlay lower. Monthly payments can also be offset against revenue for tax purposes, but capital allowances cannot usually be claimed. Leasing is designed as a rental, involving return of the asset at the end of the contract, though a business can continue leasing the item, or arrange for purchase of the item by discussing this with Portman at the end of the term. 

This can be the best financial decision equipment that is used for a one-off or a limited number of projects. Buying the equipment may be a significant and unnecessary expense if it sees little or no use after the initial asset finance period. It may also come with additional costs, such as storing or maintaining the equipment.

Lease finance is our most popular form of finance for equipment, machinery, and vehicles. This is due to the lower initial outlay and flexible end of term options. 

Explore and apply your Lease Finance solutions

Equipment Refinance

One of the best ways to free up funds is equipment finance, applicable in any area of your business.

Business equipment refinance does this through selling equipment you own outright and leasing it back. This releases tied-up capital and moves the asset’s cost to ongoing monthly payments.

The freed-up money can far offset the monthly instalments when used well. Equipment finance is available with both hire purchase lease back and lease finance options. 

Learn more and apply for Equipment Refinance options with Portman

Business Finance Fuels Growth

Finance is a great way to introduce or free-up capital for a business. They get your business up and running and enable business growth. The various funding options can give you access to essential equipment to expand your business’s capabilities. Used well, the trade-off of interest for cash infusions can transform your business. If using to win new contracts, capture new opportunities or expand to serve increasing demand, the financial gain can outweigh and interest payments.