Can a business with EIS or SEIS investors use invoice finance?
An EIS or SEIS-backed company can use invoice finance, though directors should be aware that granting security over receivables does not in itself affect the qualifying conditions for Enterprise Investment Scheme relief. However, it is worth taking advice if the business is considering taking on debt finance alongside equity, as the interplay of security structures can become complex. The lender will carry out its standard credit assessment and will not usually require knowledge of the investor structure unless it is material to the company's ownership or control.
What this means for your business
For a UK SME that has raised funding through the Enterprise Investment Scheme or Seed Enterprise Investment Scheme, using invoice finance is generally straightforward. The business can assign its receivables to a lender in the usual way, and this security arrangement does not, by itself, strip investors of their EIS or SEIS tax relief. In practice, the lender will assess the business on its trading performance, debtor quality, and creditworthiness, rather than on its investor register. Directors should nonetheless take professional advice before combining equity investment under these schemes with any form of debt finance, because the overall structure of the business, including security and control arrangements, can have implications that are worth reviewing carefully before committing.
Key points
- An EIS or SEIS-backed company is not automatically disqualified from accessing invoice finance simply because it has taken on scheme investment.
- Granting a lender security over trade receivables does not in itself affect the qualifying conditions that investors rely on for their tax relief.
- Lenders will conduct a standard credit assessment focused on the quality of the debtor book and trading history, not on the equity investor structure.
- Directors should seek specialist legal or financial advice if combining EIS or SEIS equity with debt finance, as security and control structures can interact in complex ways.
- If the investor structure materially affects ownership or control of the company, the lender may request further information as part of its due diligence process.
Common pitfalls
A common mistake is assuming that because EIS and SEIS rules place restrictions on certain types of finance, invoice finance is automatically off the table. This is not the case, but directors sometimes act too cautiously and miss out on useful working capital. Equally, some businesses go too far the other way and add debt structures without taking advice, only to discover later that other arrangements within the company, rather than the invoice finance itself, have created complications. Always review the full picture with a qualified adviser before proceeding.
Related questions
Will taking on invoice finance affect my EIS investors' tax relief?
Granting security over receivables through invoice finance does not by itself affect EIS qualifying conditions. However, the full structure of any financing arrangement should be reviewed by a qualified adviser to ensure no other element inadvertently causes a problem for investors.
Does a lender need to know about our EIS or SEIS investors when we apply?
Most lenders will not require detailed knowledge of your investor register unless it is relevant to the ownership or control of the business. If your cap table means that control sits with institutional or scheme investors in a way that could affect credit decisions, the lender may ask questions during due diligence.
Are there any types of invoice finance that are more suitable for EIS or SEIS-backed companies?
There is no specific type of invoice finance that is uniquely suited to scheme-backed companies. Both confidential invoice discounting and disclosed factoring are used by early-stage businesses, and the choice will depend on factors such as debtor concentration, turnover, and how the business wishes to manage its credit control function.
Director, Market Invoice
Oliver leads Market Invoice's editorial and comparison research. With a background in UK commercial finance, he oversees provider analysis, rate verification, and industry reporting across all verticals.
Last reviewed: 9 June 2026