What are the best funding options for B2B businesses?

Securing funding is a powerful way to accelerate growth and businesses today have more options than ever before when it comes to raising capital. Whether they are focused on expanding operations, investing in R&D, or pursuing an acquisition strategy, the additional cash provides support to a business as it continues on an upward trajectory.

However, while the variety and availability of funding options is a welcome change from times past, it does make the fundraising process challenging to navigate. How do you know when it’s the right time to fundraise? Which lenders or investors should you approach? Should you approach them directly? What type of funding is going to suit your business best?

Funding fundamentals: First thing’s first

Before diving headfirst into the ocean of different funding options, business leaders should ask themselves the following questions:

1. What growth stage is my business at?
   Are you a startup that needs an additional cash injection to take things to the next level? Are you a scaling business looking to expand or invest in R&D? Are you an established business preparing for an acquisition? The stage that your business is at will have a significant impact on the type of funding that is best suited to you AND that you will be eligible for, so knowing exactly where you’re at on your growth journey is a good place to start.
2. What is my revenue model?
   Do you have predictable, recurring revenue, or does your business operate on a project-by-project basis? Do you have long lead times between order and delivery? Lenders assess funding options based on your revenue model, so understanding it will help you identify the most suitable funding structure and lender preferences.
3. What is my cash flow cycle like?
   Are there any specific cash flow challenges your business experiences? For example, are you in an industry that faces long payment terms or seasonal fluctuations? Some funding solutions are designed specifically to support cash flow challenges, so being clear on what these are will give you a headstart when it comes to choosing the right lender. Equally, any investment that is structured as debt will require repayment, so insight into what you could afford to repay, without disrupting your cash flow, is crucial to ensuring sustainable financing and avoiding financial strain.
4. What would I use funding for?
   The million dollar question. Are you looking to strengthen your working capital position? Invest in new products, or research and development? Is the intention to expand your teams and/or geography? Is there an appropriate acquisition opportunity you want to pursue?
   While the above questions are useful for identifying the type of funding that is likely to be a good fit, really clear knowledge as to what you will use funding for gives a strong indication as to whether it’s the right time to start fundraising. A clear plan for how you will use funds and the impact this will have on your business makes it much easier to consider the cost of capital versus its return and therefore make an informed decision.

Types of funding

You know what you would use funds for, you’re clear on your stage of growth and how the funds would support your business strategy. Your revenue and cash flow both support a fundraise. You are confident that fundraising is the right thing to do. What next?

There are so many specialist funding options and specialist lenders that there are too many for us to list here – and weighing up debt versus equity is a topic that can be explored all in its own right. If you’ve been able to answer the questions above, then a sensible next step is to speak to an advisor. If you choose one with a strong track record and experience of working with businesses similar to yours, they are going to be well-versed in the types of funding arrangements that are likely to work for you.

However, it’s always helpful to have a bit of an idea of what’s out there, so we have broken down some of the most common funding options for B2B businesses and which types of business they suit best.

1. Venture debt and term loans

For businesses with predictable revenue and strong growth prospects, venture debt and term loans provide capital without diluting ownership. These are sometimes referred to as growth debt or growth credit and some lenders will also support pre-profit businesses, as long as the business can demonstrate a clear runway to profitability.

Best suited for:

• SaaS and subscription-based businesses with contracted revenue
• Professional services firms with repeat client work and strong cash flow
• Companies seeking funds for M&A or strategic expansion

Pros:

• Retain ownership and control as there is little, if any, equity dilution
• Predictable repayment structure
• Covenant-lite, depending on lender
• Flexible use of funds
• Ability to tranche

Cons:

• Requires strong cash flow or a clear path to profitability
• Debt servicing costs need to be carefully managed

2. Equity investment

For businesses with high-growth potential but limited short-term cash flow, which makes debt funding unsuitable, equity investment can provide the capital needed to scale quickly. This could include venture capital, private equity, or support from an angel investor.

Best suited for:

• Tech and software businesses with strong ARR but operating at a loss due to high reinvestment
• Companies in rapidly expanding markets where competitors are also securing funding (and pursuing growth strategies)
• Businesses looking for strategic support from investors with industry expertise

Pros:

• No immediate repayment obligations
• Access to investor expertise and networks

Cons:

• Dilution of ownership and control
• Longer fundraising timelines compared to debt options

3. Invoice finance and trade finance

For businesses with long payment terms or lead times, invoice finance and trade finance help improve cash flow by unlocking capital tied up in unpaid invoices.

Best suited for:

• Wholesale, manufacturing and distribution companies dealing with extended payment cycles or lead times between order and delivery
• Service-based businesses that issue large invoices with long payment terms
• Companies looking to bridge short-term cash flow gaps without taking on long-term debt

Pros:

• Quick access to capital without giving up equity
• Aligns with working capital needs

Cons:

• Costs can add up if used frequently
• Lenders typically advance a percentage of the invoice, not the full amount

4. Asset-based lending

For businesses with significant physical assets, asset-based lending enables them to borrow against various asset classes including inventory, equipment and real estate.

Best suited for:

• Construction and infrastructure businesses with valuable machinery and assets
• Manufacturing firms looking to finance large equipment purchases

Pros:

• Access to capital without relying on cash flow
• Can be structured flexibly based on asset value

Cons:

• Requires asset valuation and collateral
• Defaulting can result in loss of assets

5. Bank Loans

Traditional bank loans remain a cost-effective option for more established businesses, such as those with strong financial records and a lengthy operating history, but for this reason are usually not readily available for earlier stage, high-growth firms.

Best suited for:

• Companies with strong financial histories and profitability
• Businesses that prefer structured repayment terms over dilution
• Those seeking capital for specific, well-planned growth initiatives

Pros:

• Competitive interest rates
• Clear repayment structure
• Often leveraging existing banking relationships

Cons:

• Banks have strict lending criteria, making access difficult for some SMEs
• Banks may also impose restrictive loan covenants that have a direct impact on what you can and can’t do with the business
• Alternative lenders may charge higher rates for increased flexibility

Finding the right fit

There’s no one-size-fits-all funding solution. The right option depends on your business model, cash flow and growth plans. Many businesses also use a combination of funding types—such as invoice financing for working capital and a term loan for expansion—to build a tailored financing strategy.

With more funding options available than ever before, understanding the landscape can be overwhelming. Seeking advice from financial advisors or corporate finance specialists can help identify the best path forward.

The key takeaway?

Be clear on your business objectives, growth trajectory and financial health before exploring funding options. The right funding partner should align with your long-term goals, not just offer quick capital.

Need guidance on your funding journey? Speak to one of our lending experts who will be happy to help navigate the best options for your business.