Public Company Financing

What is public company funding?

Public company funding is an umbrella term for all the financing options available to public limited companies (PLCs). You need capital to support operations and reach growth goals, and if you don’t have funds available to you from within the company, you might consider looking for external finance.

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Equity finance for public companies

As a PLC, you have more financing options available to you than if you were a private limited company. That’s because you can raise finance by selling shares in your company to the public, which is called equity finance.

Equity finance offers companies a great advantage over debt financing because they’re not taking on debt that requires regular repayments. Instead of repaying the funds, you issue existing or new investors new shares, which dilutes existing shareholders’ ownership percentage. This can affect your share price and voting power.

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Can a public limited company take a loan from shareholders?

Yes, a public limited company can borrow money from one of its shareholders. But you should be aware of the strict regulatory requirements involved in this process.

Shareholders must pre-approve a loan to a director through something called a resolution. This process protects the interests of minority shareholders, helping prevent conflicts of interest. If the shareholder providing the loan isn’t a director, then the process is easier.

The loan always needs terms stating the interest rate, repayment schedule, and the security, if any, that is provided. These terms help protect both parties and ensure they withstand scrutiny from regulatory bodies or auditors.

Usually, shareholder loans for public companies are more flexible and typically have more favourable rates. That’s because the shareholders have a vested interest in the company doing well.

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Traditional business loan options for public companies

If equity financing isn’t for you and you want to explore debt financing, you have plenty of traditional funding options available to you. Note: Please scroll further down for alternative financing products.

Limited company loans

You can apply for a limited company loan from as little as £1,000. As long as you’re UK-registered, have been trading for at least three months, and have a minimum annual turnover of £10,000, your public company could be eligible for a limited company loan. Choose between unsecured and secured loan options.

Large business loans

If you’re looking to make a sizable investment in your business development, perhaps open new premises, overhaul your branding, or renovate existing facilities, you could apply for a large business loan borrowing in excess of £2 million. The lender usually gives these loans as a lump sum, and the borrower repays in monthly instalments with interest.

High net worth lending

If you have high income or high-value assets, that doesn’t mean you have the capital necessary to invest in projects. With high net worth lending, the lender will look at your high-value assets and make lending decisions based on your repayment strategy, i.e. how you intend to repay the loan. This can be a great way to access quick cash flow to use as a director of your public company.

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Debt financing vs equity financing: the quick run-down

Here are some differences between debt financing and equity financing. Which one suits your business best really depends on a few things, like your business goals, whether you want advice, whether you’re happy to give away shares in your company, etc.

With debt financing…

• You don’t dilute company ownership
• Interest payments are tax-deductible
• Maintain control while accessing capital to grow

With equity financing…

• No loan repayments
• Access business advice/expertise alongside capital
• Traditionally can access more funding through equity financing

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Alternative financing options for public companies

If you’re looking for a financing alternative that’s a little more bespoke than traditional loans or equity financing, then the following products might be what you’re looking for.

Revolving credit facilities

Revolving credit facilities are a bit like a credit card; you agree on a limit, and you can draw the funds down and repay as needed. Once you repay, you can reuse the funds again. You only pay interest on the money you borrow, making this a flexible and affordable financing option for public companies.

Invoice finance

If you issue your customers invoices with payment terms, you can unlock up to 95% of the unpaid invoice amount through invoice finance. This means you can keep cash flow healthy because you don’t need to wait for your 30, 60, or 90-day invoice terms for payment. You can sell one or multiple invoices through the lender’s platform and access cash almost immediately.

Invoice finance can be a good option if you have bad credit. This is because you’re not taking on traditional debt, and the lender is more interested in the creditworthiness of your customers, rather than you.

Asset finance

If you have assets, you can borrow against them to access finance, or you can spread the cost of an asset over time, so the cost of the asset is more affordable in monthly payments. So if you want to invest in high-end equipment to help you stand out from the competition, you can use asset finance to make affordable monthly payments while reserving cash to keep business operations running smoothly.

Merchant cash advance

If you take card payments from customers and turnover at least £2,500 a month in card sales, you could be eligible for a merchant cash advance. An MCA is repaid as a percentage of your sales, so you repay automatically. This means you don’t have any fixed loan repayments to worry about. If you take fewer customer card sales, you repay less of your loan. This is particularly useful for seasonal businesses.

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Compare PLC financing options with Capalona

If you’re seeking out debt financing, you can work with platforms like ours. At Capalona, we help you find and compare debt finance options instantly and all in one place. Compare total repayable, interest rates, and more through our free self-serve platform to ensure you’re making an informed decision.

If you’re considering equity finance, you will likely work alongside investment banks and corporate brokers to find what you’re looking for. These relationships can take a while to nurture, so always look into your options plenty of time before you need the funding.

Ready to find and compare public company loan options? Getting a quote doesn’t affect your credit score, and you’re under no obligation to accept any quote offered.