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Alternative funding for small businesses

Been refused a loan by the bank? Your funding opportunities don’t stop there

Bank loans can be hard to come by for small businesses and start-ups. Since the recession, banks have often closed their doors to SMEs, and funding has become increasingly scarce. However, to fill the gap, a number of innovative new means of financial support have emerged, and this guide runs through some of the best.


Crowdfunding – raising money using contributions from a large number of people – is now big business, and has helped launch and sustain thousands of businesses. It also comes in various forms.

Seedrs is an equity-based company that lets all types of investors buy into your business. Kickstarter meanwhile is donation-based, and allows businesses and inventors to find ‘backers’ within their own online communities.

But there are other crowdfunding models emerging too. Zopa is a peer-to-peer lending company that offers loans to businesses entirely independently of banks. Lenders are incentivised by making money through interest, and the rates offered to business owners are typically much lower than bank loans.

Similarly, business-lending models like Funding Circle allow serial investors to invest in multiple companies at once. Loans from a single investor are far more common through Funding Circle too, which offers the potential of individual advice and mentoring.

Finally, some crowdfunding platforms are rewards-based, like Indiegogo. As a small business, you search for supporters and decide how you will reward them.

Billions are raised via crowdfunding, so it’s worth a go, especially if you’re struggling to convince your bank.

Business accelerators

Business accelerators, sometimes called incubators, are companies or initiatives that offer funding and mentoring to small businesses with provable potential.

Winning their support can be challenging; the application process can be tough. But when you do succeed, you can win more than just money.

A well-established example is Seedcamp, while Collider offers cash for equity investment in start-ups; especially those in the marketing or advertising sectors. Although these examples are focused on tech businesses, accelerators cover a wide range of industries – you can find all the major UK accelerators here.

Government-backed loans, competitions and grants

The government offers indirect support to small businesses through initiatives like Start Up Loans. There are also a number of regional initiatives that use government money to support local businesses.

Then there’s the Regional Growth Fund, which allocates money to regional bodies that, in turn, help local businesses. It also joins forces with businesses like Angel CoFund, which is a private body subsidised by government finance that invests in the most promising British businesses.

Finally competitions, many of which are listed here, not only offer catch-free cash, but also offer excellent PR opportunities.

This is just a snapshot of what’s available. For a comprehensive list of all the ways you can fund your business without heading to the bank, go to

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