6 alternative ways to fund your design business

Written by: Sarah Dawood
Published on: 18 Nov 2015

6 alternative ways article

This week, the Creative Industries Federation has released Creative Industries – Routes to Finance: a guide that aims to help arts and creative businesses find funding.

While it looks at expansion of big ventures such as museums and galleries, it also focuses on how small businesses can gain investment beyond the traditional sources of bank loans or private capital.

We’ve highlighted six key ways to fund your design business.

The British Business Bank

The British Business Bank provides loans and investments for start-up and growing businesses via partner organisations, to enable small companies to expand. It will soon be announcing an Enterprise Capital Fund, which will be invested in businesses within the creative industries.

It is currently working with 80 partner organisations, and its programmes are currently supporting £5.7bn of finance to smaller and mid-size companies. It has also published a business finance guide, which provides advice on sourcing investment.


Crowdfunding gives start-up projects and businesses an online platform where they can campaign for financial backing. There are two different types: rewards-based and equity crowdfunding.

Sites such as KickStarter and Indiegogo are popular rewards platforms, giving backers incentives such as free merchandise or event tickets. Design projects which have been launched through Kickstarter include Mr Bingo’s Hate Mail postcard book, which received £135,000 in backing, and the Plumen low energy light bulb, which received £39,000.

Equity crowdfunding gives backers a share in the company, so they become investors. This is used on sites such as Crowdcube and Fundable. While equity crowdfunding can be “high-risk” and requires legal advice, says the Creative Industries Federation, it has “become a vibrant source of finance for some creative ventures”.

Accelerators and incubators

Business accelerators provide expert advice, mentoring, and practical and technical support for new ventures, in exchange for shares in the company. These can be a “very valuable route for start-ups”, says the Creative Industries Federation, and are often supported by the EU, the government, universities and big companies.

Incubators are a similar resource, providing workspaces that allow people to develop projects and carry out research. Part of the Vinyl Factory development in west London has recently been turned into the Central Research Laboratory – a new incubator enterprise for start-up product design businesses.

Loans for start-ups

Start Up Loans is a government scheme overseen by the British Business Bank, which provides advice, loans and mentoring for young businesses. Loans of up to £25,000 are available at a fixed interest rate of 6% per year for businesses less than 24 months old. You can submit applications online.

There is also a Creative Industry Finance programme, which launched last year and is supported by Arts Council England. It gives creative businesses loans starting at £2,500, provided via various lending partners. Companies must have been active for 18 months, be based in England and be within a creative sector to be eligible. You can find out more on the website.

Peer-to-peer lending

Online platforms in the UK match up lenders with borrowers, following computerised account and credit checks. Peer-to-peer lending is a “fast-growing type of finance for young companies”, says the Creative Industries Federation, and can be a “quick way of raising small amounts” – but comes with a “number of risks for borrowers and lenders”. It is regulated by the Financial Conduct Authority. You can find out more on the Peer2Peer Finance Association website.

Other government support

Local, regional and national government provide advice, practical support, and grants or loans for businesses. The level of support is dependent on where in the UK your business is based. Start by contacting local chambers of commerce to see what support they provide for creative ventures, says the Creative Industries Federation. You can find out more on the British Chambers of Commerce website.

Read the entire Creative Industries – Routes to Finance guide here.