Managing a business without availing loans is probably a new concept.  Inflation and high interest rates prevailing in the market cause hardships to the business.  Even though banks, financial institutions and individual lenders offer loans to the business houses, many of them find the terms and conditions stringent and interest rates substantially high.  The financing agencies very often face a situation where the recovery of loan or interests becomes impossible because of poor financial performance of the business.  Consequently the financiers find that the resources extended to the business, becoming non-performing assets.  It is for such reasons that bank and financial institutions insist on collateral or security against loans.

In UK there are thousands of rich private investors who offer financial assistance to tide offer difficult situations faced by the enterprises.  They function as a group known as business angels.  The group offer nearly 500 million pounds every year as investment in business, in the form of equity participation.  Business angels invest in all types of business whether they are big or small.  The group will accept nominal equity participation unlike certain other groups.  

Venture capital is another resourceful group who are also interested to invest in business.  Depending on the size and performance of the enterprise, they invest millions of pounds as equity.  The venture capital fund offer to help the enterprises with their rich experience and expertise, which they have acquired in the field.  Venture capital will claim equity participation over fifty per cent of the total investment of the enterprise.

For small enterprises, alternate investment market is a convenient substitute for venture capital fund.  Regional capital fund administered by small business service is also extending helping hands to the enterprises which are having teething problems.  The Government in UK have introduced many schemes to support small and medium business houses in the form of enterprise capital funds.  About 200 million pounds are at the disposal of the above funds.

Apart from the above mentioned financial resources extended through equity participation, the government have also offered loan guarantee schemes to new enterprises. The scheme is a joint venture of the banks and the department of trade and industry in UK.
No equity participation is involved in this scheme.  It is a specially designed plan of loan, guaranteed by the joint venture company without causing much hardship to the business.

There are many other methods adopted by the business enterprises to reduce their debt burden.  They depend on family and friends to participate in the financing and offer them reasonable returns. At the same time there is no equity participation on their part.  A more popular system is the invoice discounting.  The financiers advance cash against invoices from banks or large companies, reducing the dependence on loans.

Private investors in groups have come to the rescue of cash starved enterprises.  Such investors receive reasonable returns without actually participating in the equity.  The business will be able to grow without availing loans at high interest rates. But viability of the enterprise, efficiency of the management and market response for the products are among the criteria that qualify for financial support from individuals or institutions.