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Government-backed finance
Selling shares looks free because there are no repayments. It is usually the most expensive money a growing business ever takes. Here is the honest comparison.
Equity finance means selling a stake in your business to investors in exchange for capital. The British Business Bank runs a family of programmes that channel money into this market: the Angel CoFund invests alongside experienced angel investors, the Regional Angels Programme pushes angel capital beyond London, Enterprise Capital Funds back venture funds investing in high-growth companies, and programmes like Future Fund: Breakthrough co-invest in R&D-intensive technology businesses. For genuinely high-growth, pre-profit companies, especially in technology and life sciences, equity is often the right and only answer, and those programmes are worth knowing about.
Honest disclosure before anything else: we are a credit broker. We arrange debt, not equity, so we have a horse in this race and you should read this page knowing that. What follows is still, we would argue, the analysis your accountant would give you.
Equity has no monthly repayments, which is why it looks cheap in year one. But it is permanent. Sell 20% of your business today and you have sold 20% of every year of profit and 20% of the eventual sale value, forever, plus taken on investors with opinions about how you run the company. If your business succeeds, that 20% will likely cost multiples of what any loan would have. Debt, by contrast, has a defined cost, a defined end date, and when it is repaid you still own everything. The discipline of repayments is real, and debt is not right for a business without the cashflow to service it, but for an established, profitable business funding growth, premises, equipment or acquisitions, borrowing usually preserves far more value than dilution.
The practical test we suggest: if your business has revenue and a path to servicing repayments, price the debt option properly before you sell a share of anything. With the Growth Guarantee Scheme widening lender appetite, asset and invoice finance leveraging what you already own, and secured lending against property, the debt market reaches further than most owners assume. Get both numbers, then decide with your accountant.
Also see: Government-Backed Finance · Growth Guarantee Scheme · Business Loans · Commercial Mortgages
Start with what the money is for, not the scheme name. One call maps the realistic routes and what each would take.
Frequently asked questions
When the business cannot service debt: pre-revenue, pre-profit, or burning cash to grow at a rate lenders will not fund, which is common in technology and life sciences. Equity investors are buying the upside precisely because there may be nothing to repay them from for years. For that profile, programmes like the Angel CoFund and Enterprise Capital Funds exist for good reason.
No, and we will not pretend otherwise. We are a credit broker; equity fundraising is done through angels, venture funds and corporate finance advisers. What we can do is price the debt alternative properly so your equity decision is made with both numbers on the table, and arrange the debt if that side wins.
They put government money alongside private investors: the Angel CoFund and Regional Angels Programme co-invest with angel investors, Enterprise Capital Funds back venture funds, and Future Fund: Breakthrough co-invests in later-stage R&D companies. You access them through the investors and funds they back, not by applying to the British Business Bank directly.
They carry different risks. Debt must be repaid on schedule and often involves personal guarantees, so it demands cashflow discipline and honest stress-testing. Equity removes repayment pressure but permanently reduces your ownership and control. The riskiest option is usually the one taken without pricing the alternative.
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