From Stability to Scale

September 1st 2025

Things are hard – there’s no denying it.  High interest rates, inflation, the cost of energy and logistics, international tariffs, sluggish consumer appetite, long production cycles and buyer payment delays make it difficult to manage each business’s story – be that starting up, staying afloat or scaling up.

During a recent BFG consultation with industry retailers, a request was made to learn about financial options available for supporting different business needs – with a focus on working capital and growth.

The space of this article will not permit us to cover the vast world of finance.  Rather, what follows is a taster of the most obvious finance options that can be explored for YOUR business needs.

Let’s jump in.

1. Debt Options

Debt finance remains the most familiar route for small homeware businesses seeking working capital, but access often hinges on creditworthiness, available security and the level of documentation.

Traditional loans and overdrafts may be out of reach for companies with modest profits or limited credit history, while more flexible alternatives, such as invoice financing, offer quicker, “as needed” access but at higher cost.

Understanding the trade-offs between accessibility, speed, cost and risk is key to selecting the right debt structure.

Option 1: Revolving Credit Facilities

A revolving credit facility (RCF) is a flexible form of business finance that functions more like a financial buffer than a one-off loan.

Rather than drawing down a fixed lump sum, a business is approved to borrow up to a set limit and can access funds as needed, repaying and re-borrowing over time while the facility remains open. This “revolving” structure means the credit refreshes with each repayment, offering continuous access to working capital.

RCFs are particularly useful for managing short-term cash flow gaps, especially in industries with seasonal fluctuations or unpredictable payment cycles. They’re often straightforward to set up, especially through “relationship banks”, and typically require minimal documentation. 

Once in place, an RCF can be a multitasker, supporting anything from purchasing stock and paying suppliers to bridging cash flow gaps and funding large customer orders.

Costs vary depending on the size of the facility, the borrower’s credit profile and available security.

Monthly interest rates typically range from 1% to 4%, with most providers charging a one-off arrangement fee of 2% to 3%. Some facilities also include a non-utilisation fee, which covers the moneys allocated by the lender but undrawn, reflecting the value of having capital readily available when needed.

It is unusual for an RCF to be made available to a start-up or a micro-business.  Instead, the typical borrowers are established, larger businesses with robust financial management and proven creditworthiness.

Option 2: Good Old Overdraft

For businesses facing seasonal swings, long lead times or delayed payments, an overdraft offers a flexible cash flow buffer.

Tied to the current account, it allows short-term access to extra funds – ideal for bridging supplier costs, pre-peak stock purchases, or covering quieter periods. Interest applies only to the amount used, offering agility without long-term commitment.

Though setup is usually simple, disciplined use is key. Costs can exceed other credit options, and banks may require security or personal guarantees.

Used wisely, an overdraft helps furniture businesses stay responsive, supporting operations without overextending financial risk.

Option 3:  Invoice Financing

Specialist invoice financing, such as factoring and receivables financing, can unlock fast cash by selling unpaid invoices to a finance provider – well suited for businesses with reliable B2B customers, as funding hinges on customer credit strength.

Typically short-term and transaction-linked, it offers flexible access to working capital without adding balance sheet debt. However, costs are higher than RCFs and disclosure may affect customer relationships.

Structural complexity and the associated legal fees do vary. For furniture businesses, it can be a strategic tool for scaling up – but only when aligned with operational and financial realities.

Option 4: Prepayment Finance for Raw Material and Component Procurement

Manufacturers sourcing timber, textiles or components, especially from overseas, often face upfront supplier payment demands.

Prepayment finance enables businesses to access funds specifically to pay these suppliers before goods are shipped, helping maintain production schedules and often secure early-payment discounts.

It’s particularly valuable when working with suppliers who offer limited or no credit terms, or when long lead times make traditional invoicing impractical.

However, this flexibility comes at a cost. Interest rates on prepayment finance are typically higher than standard business loans, and lenders will charge arrangement fees. Some facilities also require collateral and payment guarantees. 

For these reasons, this type of finance is best suited for high value-high volume, recurring supply orders.

Option 5: Government Schemes and Grants

Growth Guarantee Scheme

• Administered by the British Business Bank (“BBB”), this scheme helps British SMEs access finance to invest and grow, especially those struggling to secure commercial funding.

• Businesses can apply for up to £2 million across products like term loans, overdrafts, asset finance and invoice finance.

• Loan terms range from 3 months to 6 years, with government-backed guarantees covering 70% of lender risk – offering lenders an incentive for lower interest rates.

• Interest rates typically fall between 5% and 10%.

• To qualify, businesses must be UK-based and have turnover under £45 million.

• Available until 31 March 2026, early action is advised.

Start-Up Loans Programme

• Designed for entrepreneurs trading under three years, this BBB’s programme offers personal loans of £500–£25,000 per founder (up to £100,000 per business), with fixed 6% interest and 1–5-year repayment terms.

• No collateral is required, and applicants receive 12 months of mentoring. The scheme is open to UK residents aged 18+ and is ideal for sole traders and microbusinesses with viable plans.

• Success story in point is Frank Olsen Furniture, launched in 2017 with a £25,000 loan, which now supplies major UK retailers such as Argos, Next and Dunelm and exports globally.

2. Equity Options

Unlike debt, equity finance provides capital in exchange for ownership, making it better suited to strategic growth rather than short-term cash flow.

For small furniture businesses, it can support expansion, design investment or market entry.

As return on capital is not guaranteed, equity investors come armed with expertise and patient capital and expect influence and a share of future profits.

It’s a collaborative path, best for founders ready to scale with transparency and shared decision-making.

Option 1: Angel Investment

Angel investors are high-net-worth individuals who back early-stage businesses, often pre-profit, with capital, mentorship and industry connections.

They can offer flexible, relationship-driven support to homeware brands, especially those with unique know-how, design or sharp scalability vision, in exchange for minority stakes (typically 10–25%).

However, founders must be ready for shared decision-making and growth expectations, both steep and fast, with potential downsides including equity dilution, leadership pressure and misaligned goals. A clear value proposition and credible growth plan are essential, and personal rapport is highly desirable.

Recent success story in point is Roomix UK which raised £850,000 from angels to strengthen its supply chain and tech platform, demonstrating the potential when vision and investor alignment meet.

Option 2: Crowdfunding

Crowdfunding enables businesses to raise capital from a broad pool of everyday investors – often contributing as little as £10 – via online platforms. It’s increasingly popular in the furniture and homeware sector, with campaigns ranging from £10,000 to several million. Most backers are passive shareholders, though lead investors can add strategic weight.

Platforms like Crowdcube and Seedrs offer a regulated, streamlined route to equity funding, with pre-set valuations and share structures.

Fees typically range from 6–8% of funds raised, plus legal and marketing costs. In return, brands gain not just capital but community, validating product-market fit and turning customers into brand ambassadors.

Beyond compliance and technical support, platforms also drive visibility, helping SMEs build momentum.

For design-led small furniture businesses, crowdfunding can be both a funding tool and a brand-building engine.

3.  Helping Consumers Helps You

Point-Of-Sale Finance (POSF), now a norm in FMCGs, is becoming increasingly popular in homeware. And that’s little wonder given that purchases are high-value and therefore often discretionary. Offering a POSF tool can smooth the path to purchase and help customers commit with confidence.

Several key schemes are worth noting for consumer Point-Of-Sales Finance (POSF).

As an umbrella term, POSF includes both online or in-store structured instalments, interest-free credit, and Buy Now, Pay Later (BNPL) schemes.

Take DivideBuy, for instance – its interest-free instalments (2–12 months) and rapid approval make it a favourite among mid-market and premium furniture sellers.

Or Novuna Retail Finance, which supports thousands of UK retailers with flexible, interest-free plans, making it suitable for modular and bespoke ranges.

Then there’s BNPL: short-term, interest-free, and frictionless. It’s a hit with younger shoppers and ideal for fast-turnover décor. Klarna and Clearpay lead the charge, blending flexibility with mobile-first ease.

When considering each tool, it’s worth remembering that premium brands may better suit longer-term POSF whereas fast-turnover sellers thrive on BNPL’s impulse-friendly charm.

4.  Beyond Financing

Thinking outside the box and exploring shared space leases for showrooms and warehouses to reduce spending, offering ancillary consumer services such as pre-loved repurchasing (e.g., Ikea and John Lewis), in-house repair service (e.g., Honest Furniture), re-upholstery schemes and selling repair kits are pieces of the quasi-financial puzzle that can help to boost profitability.

Funding With Purpose And Precision

Effective borrowing starts with a clear purpose. Whether smoothing cash flow, securing supplier discounts, or scaling production, finance should serve strategy.

There’s no universal fit. The right option depends on size, trading history, credit profile, aspirations and operating rhythm. A high-growth exporter needs different tools than a boutique retailer. By aligning funding with commercial realities, furniture businesses stay agile, disciplined and primed for success.

The content of this article does not constitute legal or financial advice. If you’d like tailored advice on integrating finance options into your commercial strategy, please contact Natalia at natalia@interiordesignlawyer.co.uk to arrange a free consultation.