What are the main types of business finance in the UK?
UK businesses have access to eight broad families of finance: term loans, revolving credit lines, invoice finance, merchant cash advances, revenue-based finance, asset finance, working capital facilities and property finance. Most funding problems map cleanly onto one or two of them, and picking the right structure matters more than picking the cheapest headline rate.
| Type | Best for | Typical amounts | Typical speed |
|---|---|---|---|
| Term loan | One-off investment with a clear business case | £1,000 to several million | 24 hours to 5 days |
| Credit line | Ongoing or unpredictable cash flow needs | £1,000 to £500,000 | Draw in minutes once approved |
| Invoice finance | Cash tied up in unpaid B2B invoices | 80–95% of invoice value | 24 hours per invoice |
| Merchant cash advance | Card-heavy businesses needing fast funds | £2,000 to £500,000 | 24 to 48 hours |
| Revenue-based finance | Growing businesses with recurring revenue | Multiple of monthly revenue | 24 hours to 3 days |
| Asset finance | Vehicles, machinery and equipment | Tied to asset value | Days |
| Working capital | Bridging operational cash flow gaps | £1,000 to £500,000 | Hours to days |
| Property finance | Commercial property purchase or development | Larger facilities, secured | Weeks |
The rest of this guide starts from the problem rather than the product, because that is how the decision actually works: nobody wakes up wanting a merchant cash advance, they wake up needing to pay a supplier before the Christmas stock arrives.
What if the problem is day-to-day cash flow?
Uneven cash flow is the most common funding problem for UK SMEs, and the flexible end of the market exists for it. A revolving credit line gives you a pre-approved limit you draw from, repay and draw from again, paying interest only on what you use. Fundably’s flagship revolving credit providers are iwoca and Funding Circle FlexiPay. A working capital facility does a similar job where you need a lump sum for a defined gap. Bank overdrafts sit in the same family but tend to have lower limits and can be withdrawn at short notice.
What if the money is owed to you already?
If your cash flow problem is really a late-payment problem, borrow against the invoices themselves. Invoice finance advances 80–95% of an invoice’s value, typically within 24 hours, and the balance minus the fee arrives when your customer pays. Triver is the flagship same-day, single-invoice option on Fundably’s panel, alongside whole-book discounting and factoring providers for businesses that want the entire ledger funded. This route works for B2B businesses with commercial customers on 30 to 90 day terms; it does not work for consumer-facing businesses, which is where the next family comes in.
What if your revenue is card takings?
Retail, hospitality and e-commerce businesses rarely have a debtor book to borrow against, but they have something lenders like just as much: a verifiable stream of card receipts. A merchant cash advance provides a lump sum repaid automatically as a fixed percentage of daily card takings, so repayments flex with trade. YouLend is the dedicated MCA provider on Fundably’s panel. Revenue-based finance is the close cousin: repayment tracks total monthly revenue rather than card receipts alone, which suits online businesses with mixed payment channels.
What if you are buying something specific?
For a defined one-off investment, fixed-repayment products usually price best. A term loan suits expansion, refurbishment, acquisitions and refinancing: through Fundably’s 50+ lender panel, businesses can typically borrow from a few thousand pounds up to several million, with terms from a few months to 15 years. If the purchase is a tangible asset such as a vehicle, machine or kit-out, asset finance is usually cheaper than unsecured borrowing because the asset itself is the security, and asset refinance can release cash from equipment you already own. Smaller recurring purchases often sit better on a business credit card.
What about property and specialist finance?
Property finance covers commercial mortgages, development finance and bridging for trading businesses, while buy-to-let mortgages and auction finance serve property investors specifically. On the specialist side, green finance funds energy-efficiency and sustainability investment, and if you build software or games there may be money you do not need to borrow at all: R&D tax credits and video games tax relief return cash your business has already earned.
How do you choose the right type of finance?
Match the shape of the repayment to the shape of the problem:
| Your situation | Start with |
|---|---|
| Cash flow dips and seasonal gaps | Credit line or working capital |
| Customers pay you slowly on invoice | Invoice finance |
| Revenue is mostly card payments | Merchant cash advance or revenue-based finance |
| Clear one-off investment | Term loan |
| Buying vehicles, machinery or equipment | Asset finance |
| Buying or developing property | Property finance |
| Bank said no | Compare the alternative panel |
Two rules of thumb. First, never fund a long-lived asset with short-term money or a short-term gap with a long-term loan. Second, the cheapest product you do not qualify for is worth less than the right product you do, which is why comparing across a panel beats guessing at a single lender.
How does Fundably match you to the right type?
One application through Fundably covers all of the product families above. As a commercial finance broker and NACFB member, Fundably matches your business against 50+ UK lenders using a soft credit check at the matching stage, so comparing your options does not affect your credit score. Indicative offers typically come back within hours, side by side, so you can compare a credit line against a term loan against invoice finance on real numbers rather than headline rates.
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