Spring is usually when businesses start making plans. The new tax year has kicked in, the dust has settled, and there’s a bit more space to think about what’s ahead.
Maybe it’s a hire you’ve been sitting on. A second van. A site you’ve had your eye on for a while. Maybe it’s something bigger, like acquiring another business. Or maybe you don’t know what it is yet. But the feeling that it’s time to do something has started to creep in.
We’ve laid out the most common ways businesses grow in Q2 and the funding that tends to suit each one. We’ve also covered the mistakes we see when things move too quickly, and what lenders are looking for when you apply.
Buying new equipment, vehicles & machinery
If you’re buying something with a resale value, asset finance or hire purchase will almost always cost less per month than an unsecured loan. The asset itself acts as security, which brings the rate down and speeds up the process. With hire purchase you own the equipment at the end of the term, and with a finance lease you don’t, but the monthly payments are typically lower.
A lot of businesses apply for an unsecured loan to buy something that could have been financed against the asset itself. Most people don’t realise there’s a cheaper option until someone points it out. The difference in monthly cost can be significant. If the funding is for a vehicle, a machine, or a piece of kit, check asset finance before going straight to a loan.
New premises
The thing most people don’t budget for isn’t the building itself. It’s the fit-out, the legal fees, deposits, and the first few months of trading before the new location is generating revenue. A commercial mortgage covers the property, but the rest needs a separate facility alongside it.
When a property needs to be secured quickly, bridging finance can hold the deal while the mortgage completes. Terms run from 6 to 18 months and the balance is repaid at the end, usually through a sale or a refinance. Rates are higher than a mortgage, so only go down this route if there’s a clear plan for how the bridge gets repaid.
Hiring and working capital
If you’re invoicing for the work, invoice finance lets you release cash from those invoices before your customer pays. The facility scales with your turnover, which makes it a natural fit when you’re taking on more work. If the need isn’t tied to invoices, an unsecured business loan gives you a lump sum with fixed repayments. Either way, be realistic about the gap between the cost and the revenue.
Hiring someone in April and expecting them to pay for themselves by June is optimistic. Funding three months of salary before you expect a return is realistic. Our guide on how business loans work covers the full process.
Fit-outs and builds
Builds run over. It happens more often than not, and when the funding has been sized for the original timeline with no contingency, that’s where things get difficult. Development finance releases money in stages as the build progresses, so you’re not paying interest on the full amount from day one. But make sure the facility has enough headroom to absorb a delay. Our construction finance guide goes into more detail.
Systems and technology
Investing in new software, automation or internal tools can free up a lot of time and capacity, but there’s nothing physical for a lender to secure against. That means these investments are usually funded through unsecured business loans, which carry higher rates and tend to be for smaller amounts than secured lending. Before you take on the repayment, ask yourself whether the investment changes what the business can do or just how comfortable it feels to run it. Those are two very different things.
Smoothing cash flow
If your business takes a lot of card payments, a merchant cash advance can smooth out the gaps between busy and quiet periods. Repayments are taken as a percentage of your daily card turnover, so they flex with your revenue. But the effective cost is higher than most other forms of borrowing.
If cash flow is the problem, check whether invoice finance or a short-term loan would do the same job for less. Our guide on how merchant cash advances work explains the numbers.
SME funding options at a glance
| What you’re doing | What usually fits |
| Buying vehicles, machinery or equipment | Asset finance or hire purchase |
| Taking on new premises or buying a building | Commercial mortgage |
| Securing a property quickly before a longer-term deal completes | Bridging finance |
| Hiring staff or covering costs while revenue catches up | Unsecured business loan or invoice finance |
| Funding a build or major refurbishment | Development finance |
| Investing in systems, software or technology | Unsecured business loan |
| Smoothing cash flow for a card-heavy business | Merchant cash advance |
The mistakes that come up most often
The growth decisions that go wrong usually aren’t bad decisions. They’re reasonable ones where the funding was structured too tightly around the best-case timeline.
A refurbishment runs six weeks over schedule, but the loan was sized for the original plan. A second site takes longer to break even than expected, and there’s no cash left to absorb the slower months. Someone hires two people at once when one would have been enough to start with, and the payroll commitment becomes a problem when a quieter month comes along.
All of these are avoidable if the funding has enough room in it. If you’re borrowing £80,000, we’d recommend asking whether £90,000 with a small buffer would be the more sensible move. The cost of that extra headroom is almost always less than scrambling to fill a gap three months in.
What the current climate means if you’re thinking about growth
If you’re making decisions about spending or borrowing over the next few months though, here are some key considerations.
| Bank Rate | 3.75%, held since December. Lenders competing for SME business. |
| Spring Statement | Dividend tax up 2pp, income tax thresholds frozen until 2031. |
| Hiring | SME employment up 4.9% year-on-year. National Living Wage rises to £12.71 in April. |
| Confidence | Recovering. 86% of business leaders are confident about their own prospects. |
If you’re thinking about borrowing
Bank Rate is at 3.75%. While there’s been a lot of talk about further cuts, the picture is less clear than it was at the start of the year. The Middle East conflict has pushed energy prices up and that’s made the Bank of England more cautious.
It might come down later this year, it might not. Either way, lenders are competing for SME business in a way they weren’t eighteen months ago, and that competition is showing up in the terms they’re offering.
If you’re thinking about hiring
Employing people costs more than it did a year ago, and there are a few reasons for that.
- Employer NI is higher
- The National Living Wage rises to £12.71
- SME wages grew 8.8% year-on-year in February, with competition for talent pushing pay up across the board
- The employment law changes from the Q1 playbook are now live, including day-one rights to statutory sick pay and parental leave
None of that has stopped businesses from hiring. SME employment was up 4.9% year-on-year in February. If you’ve been running a person short and it’s starting to hold the business back, you’re probably already feeling the cost of not hiring.
If you’re thinking about how to pay for it
The Spring Statement didn’t bring anything dramatic, but a couple of things changed in April that are easy to miss:
- Dividend tax went up 2 percentage points
- Business Asset Disposal Relief rises to 18%
- Income tax thresholds stay frozen until 2031
If your profits grow this year, you’ll keep less of that growth than you would have last year. Before you commit to any big spending, we’d recommend getting your accountant to run the numbers on what you’ve got available after tax.
What commercial lenders look for in 2026
The specifics vary depending on the product, but across most types of business funding, lenders are looking at the same core things:
| What they’re assessing | What that means for you |
| Cash flow | Clean bank statements showing regular income and a stable balance. Bounced payments or a messy account are red flags. |
| Trading history | Most lenders want at least 6 to 12 months. The longer and more consistent, the better. |
| Purpose of funding | “I need £60,000 to buy an excavator for a confirmed contract” gets a faster decision than “working capital.” |
| Existing debt | How much you already owe relative to your income. Too much and lenders see you as over-leveraged. |
| Credit profile | A poor score doesn’t automatically mean a decline, but it changes which lenders and products are realistic. Our guide on getting approved with bad credit goes into more detail. |
The businesses that get the best rates and the quickest decisions tend to be the ones that turn up prepared. If you’ve got a cash flow forecast in place, that’s a good chunk of what a lender wants to see.
Quick wins to prepare for business funding in Q2
Q1 was about doing the boring jobs that stop the year turning into a scramble. Q2 is about making sure you’re ready to move if the right opportunity comes along. None of these take more than a couple of hours, but each one puts you in a stronger position when it matters.
1. Revisit your cash flow forecast with growth in mind
- Time: About 30 minutes if you already have one from Q1, an hour or so if you’re starting fresh.
If you’ve already got a cash flow forecast, this is about testing what happens when you add a new cost. If you haven’t built one yet, our Q1 playbook walks through how to set one up from scratch. What does your cash flow look like if you bring someone on in May? What if you take on a second van? Where does it get tight, and how long does the gap last?
Take your existing forecast and add the cost of the growth you’re considering, in the week it would hit. Map out when the revenue from that investment realistically starts coming through. Look at the gap between the two and ask yourself how you’d cover it.
You’re done when you can see clearly how long the gap between cost and revenue is likely to be, and you know whether you’d need funding to bridge it.
2. Get your funding paperwork together
- Time: About an hour to pull together, then keep it updated.
Most of what lenders ask for is the same regardless of the product. Having it ready means you can move in days rather than weeks when something comes up.
Pull together your last three to six months of business bank statements. Make sure your management accounts or filed accounts are up to date. Write a short summary of what you’d use the funding for and how much you’d need. If you’ve got existing borrowing, note the balance, rate and monthly repayment for each facility.
You’re done when everything a lender is likely to ask for is in one place, and you could send it over tomorrow if you needed to.
3. Have a conversation with a broker
- Time: 10 to 15 minutes for an initial call.
If you’re a small business thinking about funding this year, even loosely, an early conversation with a commercial finance broker means we already understand your business when the time comes.
We’re not starting from scratch, asking for documents for the first time or trying to work out your situation under pressure. We can move quickly because the groundwork is already done.
Give the Greenwood Capital team a call or drop us an email with a short overview of where you’re at and where you think you might need small business finance. If you’ve got existing facilities, mention those too so we can see the full picture.
4. Check your pricing
- Time: About 45 minutes to review.
Costs have gone up across the board this year, from employer NIC and wages to energy and materials. If your prices haven’t moved to reflect that, your margins are shrinking every month. Growth funded on thin margins is risky, because there’s no room for anything to go wrong.
Look at your gross margin on your main products or services and compare it to this time last year. Work out how much your costs have actually increased since April 2025. If there’s a gap, decide whether a price increase is realistic and how you’d communicate it to customers.
You’re done when you know what your margins look like right now, not what they were six months ago, and you’ve made a decision on pricing.