How to fund a UK startup and what each route costs

Every way of funding a startup has a cost, whether in interest, a share of the company or the time an application takes. This guide sets out the UK options and what each one costs.
Written by Peter Allen MAAT, co-founder and Finance Director of Buzz Accounting, with more than 20 years in accountancy · Updated 13 July 2026

Decide what the money is for

Before you apply for anything, be clear what the money is for and how it will be repaid or earn a return. A lender or investor needs a specific answer, such as “£40,000 of stock that sells through every 60 days at a 45% margin”. Applications go better when the use of the money is specific and your numbers show where repayments will come from.

Then match the type of funding to what the money is for:

Buying things that earn money, such as stock or equipment, suits a loan or asset finance. A loan is usually the cheapest money, and you keep all your shares.
Covering gaps in cashflow suits a working capital loan, invoice finance or a revolving credit facility, which is a credit limit you can draw on and repay as you need.
Building something unproven, such as a new product, research and development or a move into a new market, suits grants first and then equity. A loan for unproven work often needs a personal guarantee, which leaves you owing the money yourself if the work fails.

Each route has its own page, listed under funding routes below: SEIS and EIS, angel investment, venture capital, private equity, Start Up Loans, grants and R&D tax relief, and the due diligence, valuation and term sheet work that comes with selling shares.

What this guide covers

Start Up Loans, grants, other lending, revenue-based finance and equity compared
What each route costs, including personal guarantees and time
What lenders and investors check
Where to go for loans, grants and investors

The main funding routes

1. Start Up Loans (government-backed)

A Start Up Loan is £500 to £25,000 per founder, up to £100,000 for one business where each applicant owns shares and helps control it. The interest rate is fixed at 7.5%, the loan is repaid over 1 to 5 years, there is no application fee or early repayment fee, and you get up to 12 months of free mentoring. It is a personal loan to the founder for business use, so the business does not need a trading history, and it is the usual first borrowing for businesses that are pre-revenue or have just started trading. On 6 April 2026 the rate rose from 6% to 7.5%, and the scheme opened to businesses that have been trading for up to 60 months, up from 36.

2. Grants

Grants are awarded competitively. A grant does not have to be repaid, and you give up no shares for it. Innovate UK funds innovation projects, and there are regional growth funds and schemes for particular sectors, such as green technology, the creative industries and food production. An application takes days of work and success rates are low. Grants open and close through the year, so check what is open now. Your local growth hub, the government's business finance support finder and Swoop's funding platform are the places to start.

3. Bank and alternative debt

This covers term loans, overdrafts and revolving credit facilities. Banks usually want to see a trading history and often ask for a personal guarantee. Lenders other than banks usually decide faster and charge more. Compare offers on the total cost of credit, which is everything you repay on top of the amount you borrow.

AD Solicitors, a separate SRA-regulated law firm, has a guide to personal guarantees for directors.

4. Asset and invoice finance

Asset finance spreads the cost of equipment over time and is secured on the equipment itself, which makes it easier to get than an unsecured loan. Invoice finance advances a large share of the value of your unpaid invoices straight away. It helps a startup that sells to other businesses on 60-day payment terms, and it becomes expensive if you rely on it permanently.

5. Revenue-based finance

Revenue-based finance is for businesses with recurring revenue, such as subscriptions. You receive an advance and repay it as a percentage of each month's income, so repayments fall when revenue falls, and you give up no shares. The total you repay is capped at a multiple of the advance. A cap of 1.4 times the advance, repaid within 14 months, makes it an expensive way to borrow.

6. Equity

Equity means selling shares in the company, usually first to angel investors, who invest their own money, and later to venture capital funds. Over time it is the most expensive money you can take, because a 15% stake sold at seed stage in a company that succeeds can be worth millions later. It suits unproven work with a large potential upside. UK angels rely heavily on two tax reliefs, the Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS). Under SEIS a company can raise up to £250,000 and investors get 50% income tax relief. Under EIS a company can raise up to £24m over its life and investors get 30% relief. Most angels expect you to have advance assurance, HMRC's view that the company is likely to qualify, before you pitch. Our pages on SEIS advance assurance and EIS advance assurance explain how to apply, and our guides to raising angel investment and raising venture capital cover each stage of an equity round.

Three ways to fund £40,000

The figures below are illustrative, for a company that needs £40,000 to buy stock and hire one person.

Start Up Loans. Two founders take £20,000 each at a fixed 7.5% over five years. Repayments are £801.52 a month between them, total repaid £48,091.08, so the money costs £8,091.08. The founders keep all their shares and owe the loans personally.
Revenue-based finance. £40,000 advanced with a repayment cap of 1.4 times, repaid from monthly revenue over fourteen months. You repay £56,000, so the money costs £16,000, about twice the cost of the Start Up Loans. Repayments rise and fall with revenue, and in this example nobody gives a personal guarantee.
Equity. An investor pays £40,000 for 10% of the company, and the money does not have to be repaid. If the company is later sold for £4m, that 10% is worth £400,000, ten times the cash raised.

In this example the same £40,000 costs about £8,090 as two Start Up Loans, £16,000 as revenue-based finance, or £400,000 as equity if the company is sold for £4m.

What every lender and investor checks

Up-to-date accounts. The bookkeeping is current and any director's loans are explained.
A forecast that holds up to questions. A monthly cashflow forecast with its assumptions written down, and a version showing what happens if sales come in lower.
Your personal credit file. For early-stage borrowing, lenders look at the founders' personal credit records, because a young company has little credit history of its own.
What the money is for. A specific use that suits the type of finance you are applying for.

Look at the cheaper routes first, in this order: grants, government-backed loans, asset and working capital finance, revenue-based finance, and then equity. Selling shares to pay for stock usually costs many times more than borrowing for it, as the example above shows.

Where to go next

For loans and grants, Swoop's funding platform lets a business compare loans, grants and other finance. Swoop Finance Limited is a credit broker authorised and regulated by the Financial Conduct Authority (FRN 936513). Buzz Accounting may receive a referral fee from Swoop if a facility completes. For investment, our investor readiness page covers the preparation.

Funding routes

SEIS and EIS

SEIS and EIS: How we handle a round under the schemes, from advance assurance to investor certificates.
SEIS advance assurance: The company limits, the documents HMRC asks for and how to apply.
EIS advance assurance: The limits from 6 April 2026, the knowledge-intensive tests and the application.
SEIS1 and EIS1 compliance statements: When to file, the deadlines and the certificates your investors need.
SEIS or EIS: Which scheme applies to your company, and how the two work together in a round.
Knowledge-intensive companies and EIS: The tests for the higher EIS limits, with a worked example.

Selling shares to investors

Raising angel investment: Who angels are, what they invest and how to get a round ready.
Raising venture capital: The funding stages, what venture capital funds check and the 2025 market.
Private equity investment: How private equity differs from venture capital, and the accounts work in a deal.
Raising your first investment round: Getting the books and cap table ready, and the filings afterwards.
Investor readiness: How we prepare the books, forecast and records before an investor asks for them.
Investment due diligence: What investors check, how to prepare and what goes in the data room.
Startup valuation and dilution: Pre-money and post-money, a worked dilution example and EMI share valuations.
Term sheets explained: The terms in a UK term sheet and the model documents for Series A.
Advance subscription agreements and convertible notes: How the two bridging instruments compare, and HMRC's conditions for SEIS and EIS.

Loans, grants and tax relief

Start Up Loans: Government-backed personal loans of £500 to £25,000, the rate and how to apply.
Grants for startups: Where grants come from, how competitions work and what funders ask for.
R&D tax relief: Cash back on qualifying development spending, claimed with your company tax return.

Where to apply for loans, grants and investment

Loans and grants on Swoop

Compare business loans, grants and other finance on Buzz's page on Swoop's funding platform.

Swoop Finance Limited is a credit broker authorised and regulated by the Financial Conduct Authority (FRN 936513). We may receive a referral fee from Swoop if a facility completes.

See your funding options

Find Investment

List a raise of £100,000 to £2 million with a plan, a deck and a short video, and let investors make the first approach.

For professional investors, certified high net worth individuals and self-certified sophisticated investors. Run by Founder Capital LLP. Founders pay a monthly fee to list.

How listing works

SEIS and EIS

Tax relief that makes your shares more attractive to individual investors.

Advance assurance £499 + VAT before you pitch. The compliance statement and investor certificates £599 + VAT after the round.

SEIS and EIS

Start Up Loans

Government-backed loans of £500 to £25,000 per founder at a fixed 7.5%, repaid over one to five years, with up to 12 months of free mentoring.

For businesses starting up or trading for up to 60 months. The loan is personal to the founder.

How Start Up Loans work

Founder Capital invests in and lends to businesses that fit its two mandates, which are set out on its own site. Find Investment and Founder Capital are run by Founder Capital LLP, a separate firm from Buzz Accounting Ltd, the company behind this site. Andy Jackson is a director of Buzz Accounting Ltd and a designated member of Founder Capital LLP. Swoop is an independent company. Each site applies its own criteria and makes its own decisions.

How we help you get ready

1
Know your cash position
Books reconciled to the bank, a twelve-month cashflow and the number of months of runway you have. The tax bills a monthly average hides, such as VAT quarters, PAYE and corporation tax, go in on the dates they fall due. Our free cashflow template is a good place to start if you want to try it yourself.
2
Decide what kind of money fits
What the money is for decides most of it. Borrowing suits spending with a visible return, a grant suits a defined project that matches what a funder wants to pay for, and selling shares suits work that is years from revenue.
3
Prepare the evidence
Current books, filed accounts, a forecast with its assumptions, share history and, for an equity round, the SEIS or EIS paperwork. The list is below.
4
Go to the right place
Loans and grants, investors, or neither for now. Where to apply sets out what each route is for.

The financial evidence we can help you prepare

Lenders and investors ask for the same few documents. This is what we can prepare or bring up to date, and what each one shows.

Current books: Bookkeeping reconciled to the bank up to the latest month end, so the figures in an application match the bank statements behind them.
Filed accounts: Statutory accounts and corporation tax returns filed and up to date at Companies House and HMRC, with any late or missing filings dealt with first.
Forecast assumptions: A monthly cashflow and profit forecast with every assumption written down, including prices, volumes, hires and payment terms, so a reader can test it.
Share history: The register of members, each share issue and transfer, the register of people with significant control, and a cap table that agrees with what Companies House holds.
SEIS and EIS documents: For rounds that use the schemes: the advance assurance application and HMRC's reply, the compliance statement after the round, and each investor's certificate.
Ongoing reporting: Management accounts and regular updates after the money arrives, in the form your lender or investors ask for.

Prices for funding work

Quarterly Business Pulse

From £299 a month + VAT

Annual budget and 12-month cash flow forecast
Management accounts and a review every quarter
Your accounts and tax returns included

SEIS and EIS

£499 then £599 + VAT

Advance assurance before you pitch
The compliance statement after the round
A certificate for every investor

Share structure

£750 + VAT, then £195 an issue

The share you incorporated with, subdivided
Allotted between founders, registers updated
Section 431 elections inside 14 days

Funding work is priced separately from your monthly fee and quoted in writing before we start. The fee is the same whatever you raise, and lenders and investors make their own decisions.

Common questions

What funding can a brand-new UK startup get?

A Start Up Loan is the usual first borrowing. It is £500 to £25,000 per founder at a fixed 7.5%, repaid over one to five years, with no application fee and up to 12 months of free mentoring. The scheme is open to businesses that have been trading for less than five years, including those not yet making sales, and each owner who helps control the business can apply, up to £100,000 for a single business. The loans are personal, so the founder owes the money even if the business closes. Grants and asset finance are also realistic well before a bank will lend, and it is worth checking whether the company can claim research and development tax relief before you raise money.

What is SEIS advance assurance?

It is HMRC's view, given before you raise, that your company and the proposed share issue look likely to qualify for SEIS or EIS investor tax relief. The law does not require it and it does not bind HMRC. Most UK angels treat it as a condition of investing, because without it they are relying on your own assessment of whether the company qualifies. Apply before you pitch and before anyone signs an advance subscription agreement (where an investor pays now for shares issued later), because HMRC reviews the actual documents and there is no way to change a term it objects to once investors have signed and paid. HMRC's own aim is to deal with most applications within 15 working days and complex ones within 40.

Do funding searches hurt my credit score?

A soft search is visible to you but not to other lenders and has no effect on your score. A hard search is recorded on your file, can be seen by other lenders and normally happens when you formally apply, so ask which kind will be run before you agree to it. This matters for early-stage founders because lenders assess a Start Up Loan, and much early bank lending, on your personal credit file. Several hard searches in a short period can suggest to lenders that you are in financial difficulty, so apply only where you meet the lender's criteria.

Should I take a loan or sell shares?

If the money buys something with a visible return, such as stock that sells, equipment that earns or a hire whose output you can measure, a loan is almost always cheaper and you keep all of the company. Selling shares suits unproven work, such as a product that may take two years to build or a market that may not respond, because fixed monthly repayments are hard to meet while revenue is uncertain. In the example above, £40,000 costs about £8,090 as two Start Up Loans and £400,000 as a 10% stake in a company later sold for £4m.

How long does startup funding take?

A loan usually takes weeks and an equity round takes months. The Start Up Loans scheme says an application can take two to three weeks if you are well prepared, and two to three months or more if you need more support. Asset and invoice finance can complete in days once the paperwork is ready. Grant competitions run to deadlines the funder publishes, and decisions commonly take three months or more. An equity round usually takes around six months from the first conversation to money in the bank. Count back from the date your cash would run out to work out when to start.

Should I sign a personal guarantee?

A personal guarantee means you repay the debt yourself if the company cannot, so it removes the protection a limited company normally gives you. Most early-stage bank lending asks for one, and a Start Up Loan is personal borrowing from the start. Before you sign, find out whether you are guaranteeing the whole facility or a capped amount, whether each co-founder can be made to pay the whole debt, and what happens to the guarantee if you leave. A guarantee on a loan for an asset that could be sold to repay the debt carries less risk than one on money already spent on wages.

How do you help us raise money?

We get you ready: the cash position and runway, a forecast with its assumptions written down, books and filings a lender or investor can check, and SEIS or EIS for an equity round. We also help you judge whether a loan, a grant or selling shares suits what the money is for. When you are ready to apply, Swoop's platform covers loans and grants, and Find Investment lists companies for investors to find.

How much does funding help cost?

SEIS and EIS advance assurance is £499 + VAT, and the compliance statement with investor certificates is £599 + VAT. A founder share restructure is £750 + VAT. Business Pulse builds your budget and 12-month cash flow forecast from £299 + VAT a month, including your accounts and tax returns, and a forecast or business plan can also be priced on its own. Books that are behind are brought up to date first, quoted after a first look. This work is priced separately from your monthly fee, and the fee is the same whatever you raise.

Is Swoop a lender?

No. Swoop runs a funding platform where you can compare business loans, grants and other finance. Swoop Finance Limited is a credit broker authorised and regulated by the Financial Conduct Authority (FRN 936513). We may receive a referral fee from Swoop if a facility completes. Any loan is between you and the lender, on the lender's terms.

Who can invest through Find Investment?

Only professional investors, certified high net worth individuals and self-certified sophisticated investors. It is not available to retail investors. UK companies and LLPs raising £100,000 to £2 million can list with a plan, a deck and a short video, and investors make the first approach. Interest shown on the platform is not a commitment, and money and documents are handled away from it. Find Investment is run by Founder Capital LLP, and founders pay a monthly fee to list.

Should a startup contact Founder Capital?

Only if the business fits one of its two mandates. Its private equity work is buying accountancy, legal, financial advice and compliance firms, usually with £500,000 to £5 million of recurring fees. Its private credit arm, Found Credit, lends £100,000 to £2 million to limited companies and LLPs for business purposes, backed by assets, revenue or guarantees. Read the criteria on its own site before you get in touch.

Is a Start Up Loan a business loan?

No. It is a personal loan to you, which you then put into the business, and you remain liable for it whatever happens to the company. That does not make it a bad choice, but it does mean it should be sized against your own finances as well as the company's forecast. Our Start Up Loans page sets out the terms.

When should we start preparing?

Before you need the money. Books and filings that are behind take time to bring up to date, SEIS and EIS advance assurance waits on HMRC's reply, and a forecast is easier to believe when there are a few months of actual figures to set it against. Starting early also leaves room to decide that you do not need outside money yet.

How to fund a UK startup and what each route costs

Decide what the money is for

What this guide covers