Business Funding Options Compared: Which Type is Right for You?

The UK Business Funding Landscape in 2026

There are more ways than ever for UK businesses to access finance. The days of your bank being the only option are long gone. Today, alternative lenders, fintech platforms, and specialist providers offer faster, more flexible, and often more accessible funding than traditional banks.

But with more choice comes more confusion. This guide breaks down every major funding type, explains who each one suits, and helps you work out which is right for your situation.

At a Glance: All Funding Types Compared

Type	Amount	Speed	Cost	Best For
Unsecured loan	£10K-£500K	24-48hrs	6-15% APR	General purpose, predictable repayments
MCA	£5K-£300K	24-48hrs	Factor 1.15-1.45	Card-heavy businesses, flexible repayment
Invoice finance	£10K-£10M+	1-2 weeks setup	1-3% + base	B2B with slow-paying customers
Equipment finance	£5K-£5M	1-5 days	4-12% APR	Buying any business asset
Stock finance	£25K-£5M	1-2 weeks	8-18% APR	Bulk purchasing, seasonal stock
Revolving credit	£10K-£250K	24-72hrs	0.5-2%/month	Fluctuating cash needs
R&D tax credit loan	Based on claim	1-2 weeks	8-15% APR	Tech/science companies awaiting HMRC refund
Commercial mortgage	£50K-£25M	4-8 weeks	3-7% APR	Buying commercial property

Rates shown are indicative only and vary by lender, business profile, and circumstances. They are not quotes or offers.

1. Unsecured Business Loans

The most straightforward option. Borrow a fixed amount, repay over a fixed term with regular monthly payments. No assets required as security. approval is based on your business performance.

✅ Predictable repayments
✅ Fast. often same-day funding
✅ No assets needed
❌ Higher rates than secured lending
❌ Usually requires 12+ months trading

Read our full working capital guide →

2. Merchant Cash Advances

Borrow against future card sales. Repayments flex with your revenue. busy days you pay more, quiet days less. One of the easiest forms of finance to qualify for.

✅ Flexible repayments that match your revenue
✅ Very high approval rates
✅ No fixed assets required
❌ Higher effective cost than loans
❌ Only works for card-accepting businesses

Read our full MCA guide →

3. Invoice Finance

Release cash from unpaid invoices immediately. The most natural form of funding for B2B businesses. you've already done the work, so why wait to be paid?

✅ Scales with your business automatically
✅ Improves cash flow dramatically
✅ Can include credit control support
❌ Only for B2B (you invoice other businesses)
❌ Whole-ledger facilities have minimum terms

Read our full invoice finance guide →

4. Equipment Finance

Fund any business asset. vehicles, machinery, technology. by spreading the cost over its useful life. The asset itself is the security, making approval easier and rates lower.

✅ Preserve cash flow
✅ Tax efficient (capital allowances or expense deduction)
✅ Lower rates (asset-secured)
❌ Restricted to specific asset purchases
❌ Asset can be repossessed if you default

Read our full equipment finance guide →

5. Stock Finance

Fund bulk stock purchases without draining cash. The finance company pays your supplier, you sell the goods and repay from the proceeds. Essential for seasonal businesses and growing retailers.

✅ Buy more stock, sell more product
✅ Take advantage of bulk discounts
✅ Prepare for seasonal peaks
❌ Must be used for specific stock purchases
❌ Stock audits may be required

Read our full stock finance guide →

6. Revolving Credit Facilities

A flexible credit line you can draw from as needed. Like a business overdraft from an alternative lender — you only pay interest on what you use, and the facility replenishes as you repay.

✅ Maximum flexibility. draw what you need
✅ Only pay for what you use
✅ Ongoing safety net
❌ Interest can compound if balance stays high
❌ Smaller amounts than term loans

Which Type of Funding is Right for You?

Use this quick decision tree:

Need general cash flow? → Unsecured loan or revolving credit
Take lots of card payments? → Merchant cash advance
Waiting for invoices to be paid? → Invoice finance
Buying equipment or vehicles? → Equipment finance (HP or lease)
Need to buy stock? → Stock finance or trade finance
Not sure? → Tell us your situation and we'll match you

How Greenlit Funding Helps

We don't lend money ourselves. Instead, we connect you with the right lender from a panel of specialist UK business finance providers. Our service is completely free to you. we're paid by the lender, not by you.

Here's why that matters:

One application, multiple options. instead of applying to lenders one by one
Expert matching. we know which lenders approve which types of businesses
No credit impact. we don't run any credit checks
Speed. specialist will be in touch within 24 hours
No obligation. if you don't like the options, walk away. No cost, no commitment.

What Lenders Actually Look For

While each lender has different criteria, most want to see:

Trading history: 6-12+ months (varies by product)
Turnover: £10K+/month for most products
Business structure: UK limited company, LLP, or in some cases sole trader
No serious adverse credit: Active CCJs over £500, IVAs, or recent bankruptcy make it harder (but not impossible)
A clear purpose: What do you need the money for?

Important: being turned down by your bank does not mean you can't get funded. Alternative lenders have completely different criteria. many specialise in businesses that banks can't or won't support.

Ready to Find Your Best Option?

Check your eligibility online. No credit check, no obligation, completely free. Or try our funding calculator to get an indicative idea of costs.