One in ten Britons hopes to start their own business in 2026, according to a survey by market research group Public First. The findings align with Warwick Business School’s Global Entrepreneurship Report, which indicates that 36% of adults in the UK are either already running a business or intend to do so within three years. Yet ambition alone is not enough: the same Public First survey warns that 37% of those aspiring to launch a venture have run into problems raising the money they need. Access to finance has consistently been flagged as one of the principal barriers to getting a start-up off the ground.
Starting a business with zero capital is impossible, but the sums required are often more modest than many imagine. Data from the Company Warehouse suggests the average budget for new UK start-ups is around £5,000, and fewer than a third of new ventures have more than £10,000 of funding. Other estimates vary: Hewlett-Packard has put the average figure at £22,756 when incorporation, legal and administrative fees are included, while The Entrepreneurs Network calculates a more conservative £5,000. The actual amount depends heavily on the type of business. Service-based founders who can work from home using existing IT equipment will need far less than a retailer, food producer or manufacturer requiring inventory and premises. Ventures that depend on expensive machinery or equipment will also face higher upfront costs.
Self-funding and support from family and friends
Most entrepreneurs “bootstrap” their businesses in the earliest stages, drawing on redundancy payments, personal savings or income from other work. Family and friends may also be willing to help, but clear terms are essential. Is the money a gift or a loan? Will supporters receive a share of future profits? Putting the agreement in writing protects everyone and avoids disputes. Even if you cannot raise everything you need on your own, other funders will expect you to have some skin in the game.
Government grants, subsidised loans and tax relief
A patchwork of public-sector funding is available. Central and local government bodies, as well as agencies such as Innovate UK, offer non-repayable grants, some sector- or region-specific, others open to all. The government’s Business Finance Finder tool is a useful starting point, and universities and charities such as the King’s Trust also run grant schemes. The King’s Trust Enterprise Programme offers “Test My Business Idea” grants of up to £500 and start-up funding of up to £30,000, which can include a combination of grants and British Business Bank-backed Start Up Loans.
The government-backed Start Up Loans scheme has made 134,500 loans totalling £1.3 billion since its 2012 launch. Founders can borrow up to £25,000 over one to five years at a fixed annual interest rate of 7.5% — below typical bank rates. The scheme also provides 12 months of free business mentoring and access to business tools and guides. “We encourage entrepreneurs to back themselves – and we support them with developing a pre-application business plan and post-application mentoring,” says managing director Louise McCoy.
Other government initiatives include Innovate UK’s Growth Catalyst programme, which has £100 million available to combine funding with private investor connections for high-potential startups. Sector-specific pots are also offered, such as up to £10 million for aviation technologies and up to £3.5 million for cyber security solutions. The British Business Bank’s capacity has been increased to £25.6 billion, and it supports the Growth Guarantee Scheme and the expanded ENABLE programme. A package of entrepreneurship tax reliefs, including expansions to the Enterprise Management Incentives (EMI) scheme, the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT), came into force on 6 April 2026, designed to unlock private investment.
Borrowing from banks and alternative lenders
High-street banks remain cautious about lending to start-ups with no trading record or credit history, as such loans are riskier and require higher capital reserves. However, competition from challenger banks and digital lenders has grown. A strong application with a robust business plan and cashflow forecast improves the chances, particularly if a few months of trading history exist. Banks will also assess the founder’s personal credit history and may demand collateral, potentially including the borrower’s home.
A bank loan may not always be the best option. Loans for early-stage ventures are often expensive and inflexible, requiring fixed monthly repayments regardless of the business’s performance. Alternative banking products can be more suitable. Overdraft facilities and credit cards offer flexibility – debt is taken on only when needed. A line of credit provides a revolving facility: money repaid can be borrowed again, and such facilities are typically larger than overdrafts.
More imaginative products have emerged. Invoice finance allows businesses to borrow against unpaid invoices, speeding up cash flow. Asset finance provides funds to buy equipment, with the kit itself serving as collateral. Revenue-based finance fixes the sum borrowed but ties repayments to a percentage of monthly revenue – higher in good months, lower in lean ones, protecting the business from being overwhelmed by debt. These arrangements are particularly useful for e-commerce businesses (some platforms now offer their own revenue-based lending) and subscription-based ventures. They work less well for completely new ventures with no sales history.
Peer-to-peer lending platforms such as Funding Circle and ThinCats connect businesses directly with investors seeking returns, offering another route for those who cannot secure traditional bank finance.
Selling a share of your business
Raising money by selling equity avoids the burden of repayment but dilutes the founder’s ownership. Investors will expect a share of future profits and may want a say in key decisions. Crowdfunding platforms, including Crowdcube and Republic Europe (formerly Seedrs), allow businesses to pitch to a large pool of investors. Some companies have raised tens or even hundreds of thousands of pounds in this way. The UK crowdfunding market is projected to reach US$630.4 million by 2035, and new Public Offer Platform (POP) rules that took effect on 10 February 2026 removed upper fundraising caps, making larger public raises more accessible.
Business angels – wealthy individuals, often with entrepreneurial backgrounds – provide capital, advice and access to networks. The UK Business Angels Association (UKBAA) and the Angel Investment Network are good places to start. “We are very often the only source of capital for these early-stage companies,” says managing director Roderick Beer. In 2023, angel groups were involved in 289 deals worth £582 million. Newable, which acquired London Business Angels, specialises in knowledge-intensive companies and typically invests between £250,000 and £2.5 million. Angel investment remains concentrated in London and the South East, and women made up only 14% of angel investors in 2023.
Venture capital and private-equity firms tend to back more established enterprises with a track record of trading and a path to profitability. UK VC investment saw a surge in the first quarter of 2026, with startups raising $7.8 billion (a 60% increase year-on-year), driven by a record $5.8 billion for AI companies, which accounted for 74% of all VC funding.
Tax-advantaged schemes for early-stage investors
The Seed Enterprise Investment Scheme (SEIS) is designed to encourage investment in very small, early-stage businesses by offering investors valuable tax breaks. To qualify, a company must be established in the UK, have traded for no more than three years, have fewer than 25 employees and gross assets under £350,000. It can raise no more than £250,000 from investors. Founders can apply to HMRC for “advance assurance” that investments will qualify for SEIS tax benefits – a step that helps market the business to angels and crowdfunding platforms, though formal SEIS status must be obtained once fundraising is complete.
The Enterprise Investment Scheme (EIS) supports slightly older companies – generally those trading for less than seven years, with gross assets under £15 million and fewer than 250 employees. Its lifetime company investment limit has doubled to £24 million, with annual limits increasing to £10 million.
Seeking professional help
For entrepreneurs struggling to navigate the funding landscape, commercial finance brokers offer specialist advice. These intermediaries help small businesses identify suitable sources of finance and secure the money. “Intermediaries are a structural component of how funding flows to small businesses,” says Jim Higginbotham, CEO of the National Association of Commercial Finance Brokers (NACFB). NACFB members helped firms raise £33 billion of finance in 2025, a 25% increase on the previous year. Brokers work primarily with lenders, so they may be less useful for equity fundraising, but they can provide generic advice. Firms may be regulated by the Financial Conduct Authority – a legal requirement for brokers dealing with individuals, sole traders or partnerships with three or fewer partners.
