Best Ways to Raise Capital for a Struggling Business

Find The Right Business Funding

    • checkBorrow betweeen £1,000 and £5m, rates from 2.5% APR
    • checkFunds received in as little as 24 hours
    • check100% free, no obligation service

Written by Michael Foote , founder of Quote Goat, with over 13 years experience working in the finance, insurance and currency sectors.

If there’s one thing 2020 has shown us, it’s that you never know what’s lurking just around the corner. One minute you could be cruising without any foreseeable issues and the next you could hit a major bump in the road due to something completely out of your hands.

Fortunately, there are a number of ways to raise capital for a business that’s experiencing some short-term difficulties. Depending on the nature of your business or your personal circumstances, some of these may be more practical than others, so let’s take a look at some of the most common and study the pros and cons of each.

Ask friends and family

When you start out in business, it’s common to ask friends or family for small amounts of cash to help tide you over until your profits start to increase. This can be a great way of ensuring you stay afloat while you build up your sales/client base.

The best thing about borrowing from family and friends is it’ll allow you to create a flexible repayment plan and the process will usually be much quicker than a bank loan.

While this may seem like an attractive and risk-free way of borrowing cash, remember to be wary as mixing business with family and friends’ finances can potentially damage your relationship with them in the event things go wrong. This means that cash for anything risky should probably be sought elsewhere.


While still a relatively new concept, crowdfunding is fast becoming one of the most popular ways of raising capital. You set up a campaign online and ask members of the public to each make small contributions until you reach your target.

Crowdfunding can be an excellent way of raising cash if your business has huge growth potential, as people will be more inclined to invest in you. You’ll need time on your hands, though, as it can take a while to hit your goal, so if you’re facing serious financial hardship and need a quick injection of cash then this might not be the best option for you.

Bank loan

A bank loan is the traditional way to acquire cash for business owners and depending on the nature of your business it might well still be the best. A loan will give you access to a source of cash and you’ll be able to negotiate an affordable repayment plan.

Traditional secured business loans can be great if you have good credit and are willing to wait for the application to go through, but if you need cash right away or your credit history is far from exemplary then there may be better alternatives out there for you.

Merchant cash advance

A merchant cash advance is similar to a loan, but there are some key differences which will make them more or less suitable, depending on your business. While you’ll receive an up-front lump sum of cash as you would with a traditional loan, the structure of the repayment is completely different.

With a traditional loan the payment you make will be equal in amount and frequency, but with a merchant cash advance the amount you pay back will usually depend on your takings. When you borrow the cash, you’ll agree to pay a specified percentage of your debit or credit car sales, so the amount you pay is likely to change from month-to-month.

Merchant cash advances are a great option for businesses just starting out or for business owners who don’t wish to commit to the same payments each month. This type of borrowing works well for seasonal businesses who take much less at certain times of the year as you won’t have to make large payments when your takings are low. For more information, read our guide on why you should consider a merchant cash advance.

To compare merchant cash advances, head over to our price comparison page for some of the best deals on the market.

Business Finance Guides