Short answer
The right funding depends on what you need the money for, how soon you can repay it and what you're already owed. If you're waiting on money that's due (an R&D tax credit or grant payments), you can borrow against it. If you need runway to a milestone and have investors behind you, venture debt can add it with little dilution. If you export, government-backed export finance may help. If the spending is high-risk with no clear payback, equity usually fits best.
Key facts
- Start with the purpose and the repayment source
- Money you're already owed is the cheapest thing to borrow against
- Debt needs a repayment plan; equity needs a growth story
- Many companies combine several types
Match your situation to the funding
Which fits me?
1. Are you waiting on HMRC or a grant?
| Your situation | Funding to consider | Guide |
|---|---|---|
| Filed or about to file an R&D tax credit claim | R&D tax credit loan | R&D tax credits explained |
| Awarded a grant paid in arrears | Grant advance | Innovation grants explained |
| VC-backed, recurring revenue, want more runway | Venture debt | What is venture debt? |
| Exporting and need working capital | UKEF-backed export finance | Export finance explained |
| Predictable revenue, short-term spend that pays back fast | Revenue-based finance | Venture debt vs RBF |
| Pre-revenue or high-risk spending | Equity | Venture debt vs equity |
Three questions to ask first
- What is the money for, and when does it pay back? Fast payback suits debt; uncertain payback suits equity.
- What will repay it? An HMRC payment, a grant, revenue growth or the next round.
- What does it cost if things go wrong? Debt must be repaid; equity doesn't need to be.
Combining funding
Many companies stack funding: equity for the core plan, an R&D tax credit loan to bring forward the HMRC payment, a grant advance to bridge grant claims and venture debt to extend runway. Check that each lender knows about the others.
How Nighthawk does it
Nighthawk offers four types of funding for UK and European tech companies: Venture Debt, R&D Advance, Grants Advance and Export Finance. Not sure which fits? Book a call and we'll point you to the right one.
Related questions
Can I use more than one type of funding at once?
Yes, as long as each lender's security and conditions allow it.
Which is cheapest?
Borrowing against money you're already owed (R&D credits, grants) is usually the lowest-risk; equity is cheapest only if the company doesn't grow.