A small or medium-sized enterprise (SME) can fund growth in five common ways: a loan, invoice finance, asset finance, a grant or selling shares. Whichever it uses, the money goes further with separate business accounts, a cash flow forecast and cash set aside for the unexpected.

What are the common ways to fund an SME?

The five common ways are a business loan, invoice finance, asset finance, a grant and selling shares. Which fits depends on what the money is for: working capital, equipment or growth.

  • Business loans: Fixed or variable interest. Suited to large investments or expansion.
  • Invoice finance: Releases cash tied up in unpaid invoices.
  • Asset finance: Lease or buy equipment without paying for it up front.
  • Grants: Money you don’t repay, usually for innovation or growth, with conditions attached.
  • Selling shares: Raise money by giving investors part of the business.

A loan keeps ownership but has to be repaid; selling shares needs no monthly payments but gives away part of the business.

What is an SME financing programme?

An SME financing programme is a scheme, run by government, a lender or a private body, that offers small businesses cheaper loans, loan guarantees or advice. Check which UK schemes are open on gov.uk before you apply.

Such programmes typically offer:

  • Low-interest loans: A lower rate than a standard business loan.
  • Loan guarantees: The scheme carries part of the lender’s risk, so it is easier to qualify.
  • Training and advice: Help with financial planning and management.
  • Flexible repayment schedules: Set around when your cash comes in.

How can you manage money better without a finance team?

Six steps, none of which needs a finance team:

  1. Automate your accounting: Use software such as Xero or QuickBooks to cut errors and save time.
  2. Separate business and personal money: It makes tax returns and reading your numbers much simpler.
  3. Create a cash flow forecast: Predict what comes in and goes out, so there are no surprises.
  4. Watch a few figures every month: Gross margin, net profit and how much cash you have against what you owe soon.
  5. Negotiate payment terms: Agree terms with suppliers and customers that shorten the time cash is tied up.
  6. Build a cash reserve: Set money aside for unexpected costs.

If you are deciding how to fund the next stage, our CFO Advisory covers capital structure advice and scenario modelling, with fundraising preparation as an add-on.

Ozria Consulting runs the outsourced finance function for ambitious businesses. If managing the numbers has started taking time you do not have, book a discovery call.