Invoice Finance vs Equity Funding

Invoice finance gets you money from invoices your customers have not paid yet. You keep all of your company and pay fees on what you use. Equity funding means selling part of your company to investors for a lump sum. It takes longer to arrange and you give up some ownership and control for good.

What this page covers

This page covers

Invoice finance vs equity funding comparison on cost, speed, dilution, control, and suitability

Not covered here

Specific provider recommendations, venture capital deal structures, SEIS/EIS tax relief details

Side-by-side

FeatureInvoice financeEquity funding
How long to arrangeUsually days or weeksUsually months
OwnershipYou keep all of itInvestors take a share
CostService charge of 0.5% to 3% of invoice value (ABC Finance) plus interest on money drawnNo fee, but you give away part of the company
How the money comesOngoing, grows with your salesA one-off lump sum
ControlNo changeInvestors may want a board seat and regular reports
What you needInvoices to business customersA plan investors believe in, and checks on your business

Invoice finance cost range from UK broker ABC Finance (read 14 October 2026).

Invoice finance may suit you if

Equity may suit you if

AP

Adam Parker

Founder & Managing Director, Muswell Rose, founder and PSC of Best Business Loans Ltd

Adam is the founder and managing director of Muswell Rose and a founder of Best Business Loans Ltd, the company behind Market Invoice. He spent over three years as managing director of Penny, a UK invoice finance business, and his career runs through insurance, mortgages, commercial finance and fintech lending. He writes the Market Invoice library.

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Invoice Finance vs Equity FAQ

Should I try invoice finance before equity?

If your problem is waiting to be paid by business customers, invoice finance is usually the simpler place to start. You keep all of your company, and a facility is normally set up in days or weeks. Equity makes more sense when you need a large sum to build something new and you have no invoices to borrow against.

Can I use both invoice finance and equity?

Yes. They do different jobs. Invoice finance helps with the gap between sending an invoice and being paid. Equity pays for bigger plans, such as a new product or a move into a new market. If you raise equity later, tell the lender, because new investors may ask about any security over your invoices.

Which costs more in the long run?

They are charged in different ways, so there is no simple answer. Invoice finance has a service charge on each invoice (UK broker ABC Finance puts it at 0.5% to 3% of invoice value) plus interest on the money you draw. Equity has no fee, but you give away a share of the company for good. As an example, if you sold 20% of a company that later became worth £5m, that 20% would be worth £1m.