Category of Finance

The key choice when seeking funding is the type of finance you wish to attract. This funding might typically be in the form of private investment (equity) or the borrowing of funds (debt) or grants. However, alternative types of funding can be provided for example by way of mezzanine (‘half-way’) finance which is a mixture of equity and debt finance. Also mezzanine finance may involve you "giving away” some equity to the funder.

Your choice will often depend on the reason for finance but it should take into account the key differences between the types of funding. We summarise below the key differences between equity and debt finance and grant funding:

NB a key point to remember is that your funding can come from various sources to suit the needs of your business.  You do not need to use just one source of finance.  

We have tried to keep the summary here clear and simple – but inevitably some jargon ends up creeping in!  Our glossary should be able to help you here and provides a fuller description of the different forms of funding that may be available within each category of finance.