Debt financing - borrow to fund growth and manage cash flow
Debt financing lets your business borrow money to cover costs, invest in growth and smooth cash flow, then repay over time. Unlike selling equity, you keep control of your company while accessing the funds you need.
Funding Options by Tide works with 80+ UK lenders and has helped over 17,000 businesses secure £1bn+ in funding. Compare debt finance options in minutes and choose what fits your plans.
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What is debt financing and how it works?
What is debt financing?
Debt financing is when a business borrows money and repays it with interest over an agreed term. It covers a range of products from business loans and revolving credit facilities to invoice finance and asset finance.
Debt is different from equity because you do not give up ownership. Your obligations are the repayments and any fees.
How does debt financing work?
Choose the type of facility and amount you need.
Apply with recent bank statements, accounts and ID.
If approved, receive funds as a lump sum or a flexible line.
Repay according to the agreement, with interest and fees.
Reborrow if you have a revolving facility.
Types of debt finance
Term loans
Fixed amount repaid over months or years. See business loans.
Unsecured business loans
No collateral required, based on your credit profile.
Lines of credit
Lines of credit are a catch-all term that includes business credit cards. It’s when a lender extends a preapproved sum that the borrower can draw from and replace (usually within a period not surpassing one month), then rinse and repeat. These can also be referred to as revolving credit facilities.
Invoice finance
Invoice finance releases money tied up in unpaid invoices.
Asset finance
Asset finance is used to fund vehicles, machinery and equipment.
Merchant cash advance
Merchant cash advance borrows against future card sales
Commercial mortgage
A commercial mortgage essentially lets you spread the cost of purchasing a property, whether that’s a company headquarters or a warehouse. The loan uses the property itself as security and these loan types often come with lower interest rates when compared to something like a short-term business loan.
Business overdraft
Business overdraft is linked to your account, but often lower limits and higher rates.
Pros and cons of debt financing
Pros and cons of debt financing
Pros | Cons |
Keep ownership and control | Interest and fees increase total cost |
Predictable repayments for planning | Missed payments can impact credit and security |
Wide choice of products and lenders | May require a personal guarantee |
Potential tax deductibility of interest | Not all firms qualify for best rates |
Can be arranged quickly for working capital | Over-borrowing can strain cash flow |
Is debt financing right for my business?
Debt can suit businesses that:
Have a clear plan to repay from trading cash flow
Want to invest without giving up equity
Need working capital to cover seasonal dips or growth costs
Consider alternatives if you have very limited trading history or prefer not to take on repayments. See business loans for new businesses and equity finance.
Costs and rates
Your total cost depends on product, term, security and risk profile. Lenders look at:
Turnover, profitability and bank statements
Credit score and existing commitments (see bad credit business loans)
Asset quality for secured facilities
Industry and purpose of funds
Always compare APR or total amount payable, not just the monthly figure.
Example use cases
Growth - finance a marketing push using a revolving credit facility and repay from new sales.
Cash flow - bridge long payment terms with invoice finance.
Equipment - upgrade machinery with asset finance rather than a large upfront cost.
Property - purchase premises with a commercial mortgage.
Estimate your costs today
If you're ready to take your business to the next level, use our business loans calculator to get an idea of what you can afford.
Want to understand the cost of your loan?
Use our business loan calculator below to find out how much you can borrow to take your business to the next level.
Calculations are indicative only and intended as a guide only. The figures calculated are not a statement of the actual repayments that will be charged on any actual loan and do not constitute a loan offer.
Monthly payments
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Monthly interest
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Total interest
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Length of loan
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Total cost of loan
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Financial product information
Representative example*
• 7.63% APR Representative based on a loan of £50,000 repayable over 24 months.
• Monthly repayment of £2,252.94. The total amount payable is £54,070.56
*Some lenders may apply fees during the application process, please note that these are set and provided by these entities.
Annual Percentage Rates
Rates from 2.75% APR
Repayment period
1 month to 30 years terms
How does Funding Options work?
Tell us how much you need
We’ll ask a few questions about your business and the reason for your loan.
Get quotes instantly
Our smart technology will compare quotes from up to 80+ lenders to help you find the ideal business loan.
Apply for a Business Loan 🎉
We'll be there to guide you through every step of the process.
How to apply with Funding Options by Tide
No fees for comparing and no obligation to proceed.
Tell us about your business and the funding you need.
Compare tailored offers from 80+ UK lenders.
Provide documents for underwriting.
Finalise your facility and receive funds quickly.
Why choose Funding Options by Tide?
Funding Options by Tide helps UK SMEs find fast, tailored business finance by connecting them with over 80 trusted lenders. Backed by Tide and FCA-regulated, the service is free and easy to use.
Compare 80+ lenders
Access a wide range of trusted lenders: from high street banks to alternative finance providers.
No fees or obligations
Our service is completely free to use. You’re in control of who you borrow from.
Fast, personalised results
Get real-time matches based on your business profile and funding needs.
Expert support when you need it
Our team is here to help — by phone, chat, or email.
FAQs on debt financing
What is the difference between secured and unsecured debt?
Secured debt is backed by collateral, which can lower the rate and raise the limit. Unsecured debt relies on credit strength and can be faster to arrange.
How much can I borrow?
Limits vary by product, turnover and security. Higher amounts are often available with secured loans and commercial mortgages.
Will I need a personal guarantee?
Many lenders ask for one, especially on unsecured facilities. Read the terms and assess the risk. See personal guarantee loans.
Can startups access debt finance?
It is possible but harder without trading history. See business loans for new businesses and consider equity finance.
How quickly can funding be arranged?
Simple facilities can be agreed quickly once documents are provided. Larger or secured deals may take longer due to valuations and legal steps.
Please note that the information above is not intended to be financial advice. You should seek independent financial advice before making any decisions about your financial future.
It’s important to remember that all loans and credit agreements come with risks. These risks include non-payment and late-payment of the agreed repayment plan, which could affect your business credit score and impact your ability to find future funding. Always read the terms and conditions of every loan or credit agreement before you proceed. Contact us for support if you ever face difficulties making your repayments.
Funding Options, now part of Tide, helps UK firms access business finance, working directly with businesses and their trusted advisors. Funding Options are a credit broker and do not provide loans directly. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Funding Options can introduce applicants to a number of providers based on the applicants' circumstances and creditworthiness. Funding Options will receive a commission or finder’s fee for effecting such finance introductions.
Joe Morley
Business Finance Lead
Joe has been helping UK businesses secure the funding they need since 2015. Over the years, he’s supported hundreds of SMEs in accessing millions of pounds for everything from purchasing essential assets to unlocking working capital for day-to-day operations. As Head of Sales at Funding Options, Joe leads a large team of expert Business Finance Specialists dedicated to finding the right solution for every customer. His goal is simple - to make securing finance straightforward, stress free, and tailored to each business’s needs.