Starting or growing a business often comes down to one question: where does the money come from? While traditional business loans and investor funding get most of the attention, there are other routes worth considering — particularly if you already own assets that can work harder for you. Here are two practical financing options to weigh up.

1. Releasing Equity from Your Home via a Shareholder Loan

If you own property with built-up equity, refinancing your home to release some of that value can be an effective way to fund your business — without giving away shares or bringing in outside investors.

How it works:
You refinance your mortgage (or take out a further advance) to release a portion of the equity in your home. That cash is then injected into your business as a shareholder loan — effectively you, as the shareholder, lending money to your own company, rather than making it a straight capital contribution.

Why business owners do this:

• Retain full ownership. Unlike equity investment, a shareholder loan doesn’t dilute your shareholding.
• Flexible repayment terms. You can structure the loan between you and the business with terms that suit cash flow — including interest rates, repayment schedules, or interest-free arrangements.
• Potentially lower cost of capital. Mortgage rates are often considerably lower than unsecured business loans or credit cards.
• Tax considerations. Interest charged on a shareholder loan may be tax-deductible for the business.

Things to weigh up carefully:

• Your home becomes the security for the debt — if the business struggles and you can’t service the mortgage, you risk your personal residence, not just business assets.
• Lenders will assess affordability based on your personal income and existing commitments, not the business’s projected performance.
• Shareholder loans need to be properly documented (loan agreements, interest terms, repayment schedule) to avoid tax or legal complications down the line. Again, seeking accountant’s advice at the beginning is crucial.
• This blurs personal and business finances, so clean bookkeeping and legal advice are essential.

This option tends to suit business owners with substantial home equity who are confident in their business plan and comfortable using personal assets to back it.

2. Asset Financing Secured Against the Asset Itself

If your business needs equipment, vehicles, machinery, or technology, asset finance lets you spread the cost — using the asset you’re purchasing as the security for the loan.

How it works:
Instead of paying the full cost upfront, a lender funds the purchase of the asset (equipment, a van, machinery, etc.), and the asset itself acts as collateral. If repayments aren’t met, the lender can repossess the asset — but critically, your other business or personal assets typically aren’t at risk.

Common forms of asset finance:

• Hire purchase – you pay in instalments and own the asset outright at the end of the term.
• Finance lease – you rent the asset over an agreed period, often with an option to extend or upgrade.
• Equipment/asset refinance – releasing cash tied up in assets you already own, using them as security for a new loan.

Why business owners choose this route:

• Preserves cash flow. You get to use income-generating equipment without a large upfront outlay.
• Self-securing. Because the loan is backed by the asset itself, lenders often require less additional security than for unsecured loans.
• Scales with the business. As you grow, you can finance additional equipment without tying up working capital.
• Fixed, predictable costs. Repayments are usually fixed, making budgeting more straightforward.

Things to weigh up carefully:

• The asset may depreciate faster than you pay it off, leaving you owing more than it’s worth.
• Terms and conditions vary widely between lenders — early repayment charges and end-of-term options should be checked carefully. This is where a finance broker comes in to advise you on the difference and its impact.
• It only works well for assets with resale value or clear utility to a lender; niche or highly specialised equipment can be harder to finance this way.

Choosing the Right Path

Both options offer a way to fund a business without necessarily giving up equity to outside investors, but they come with very different risk profiles. Releasing equity from your home puts personal assets on the line for potentially broader business use, while asset finance ring-fences the risk to the specific asset being financed.

As with any financing decision, it’s worth speaking to a qualified financial adviser, mortgage broker, or accountant who understands your personal circumstances and business goals before committing. Getting the structure right from the outset — particularly for shareholder loans — can save considerable time, cost, and stress later on.