Director information hub: Loans and funding

Think carefully before you borrow money or seek new investors for your company.

There are many ways to obtain finance for a company. The main ones are:

A loan is money that a company borrows and must be paid back, usually with interest. Loans can be provided by individuals, banks, public sector organisations or others. Companies may use loans to start or grow.  

Before you or the company take out a loan, think carefully about what the money will be used for and if the company will be able to repay it. If the company cannot repay the loan the lender may ask the court to close it down, or take other action to recover the money. 

As a director you may be asked to give a personal guarantee for a loan taken out by the company.

If you personally lend money to your company and charge interest, you must comply with the tax rules. You must record any money you lend to the company in your director’s loan account.

Equity financing is a way of raising money by selling shares in your company to existing shareholders or new investors.

This does not always mean giving up control of the company, as investors may own only a small proportion of the shares.

There is a range of government-backed funding and financing options for small and medium-sized enterprises (SMEs). Some schemes are available to all businesses, while others are only available in certain industries or geographic regions.  

These resources can help you find funding and finance options for you and your company: 

If you are unsure, speak to your professional adviser. You can also get free guidance on funding and finance options through the Business Support Service. Visit Business.gov.uk – Find the right support for your business and enter your postcode to find support available in your area and speak to an adviser.

Help us to improve the director information hub by completing a short feedback survey.