New Business Finance for UK SMEs
Business credit cards, asset finance and the Growth Guarantee Scheme, explained.
Getting finance as a new business is harder than getting it as an established one. Lenders want to see trading history, filed accounts and a track record of managing money well, and a new business has none of that yet. It doesn't mean finance is off the table. It means the realistic route is usually different from the one an established competitor would take.
SMEmoney.co.uk We connect SMEs, including brand new ones, with specialist broker partners who between them have access to over 70 UK lenders. For a new business, that matters more than usual: rather than applying to a card provider, an asset finance company and a loan lender separately, our digital panel can point you toward whichever route actually suits a business at your stage.
New Business Finance Needs a Different Approach
A new business is judged on different things than an established one, so the products worth looking at first are often different too.
Realistic options first: Focus on routes new businesses actually get accepted for, not just whichever product has the lowest headline rate. You likely won't qualify.
Lenders who work with newer businesses: Some of our lender panel specialise in businesses without several years of trading history behind them. Our partner team will speak to you and find out which lender suits your profile and lending requirements
Free to compare: Using our calculators and introduction service costs nothing, whichever route ends up being right for you.
One conversation, several routes checked: Rather than approaching a card provider, an asset finance company and a loan lender separately, our broker panel can cover all three in one go.
Pros and Cons of Business Finance for a NEW company
Pros | Cons |
|---|---|
Speed: Business credit cards for new businesses can often be approved within days, giving you a small facility to use while a bigger application is still being considered elsewhere. That speed makes them a useful stopgap rather than a long wait for any funding at all. They can also boost your credit score for later facilities. | Speed: Asset finance and loan decisions, including Growth Guarantee Scheme applications, generally take longer for a new business than an established one. Lenders want to check more before saying yes, since there's no trading history to shortcut the assessment. |
Upfront Cost: Many new business facilities, including several asset finance agreements, don't require a large cash deposit upfront. A personal guarantee from a director is often used instead of tying up cash the business doesn't have yet. | Upfront Cost: A personal guarantee isn't free in the way it might look. If things go wrong, it can mean a director is personally on the hook for the shortfall, even after the business itself has stopped trading. You can buy separate insurance to cover most of the PG, but that's not our specialty currently. |
Ownership and Flexibility: With asset finance, you typically end up owning the equipment outright, or with the option to, once the agreement finishes. | Ownership and Flexibility: A Growth Guarantee Scheme loan, like most business loans, doesn't come with an asset to show for it at the end. You're simply repaying borrowed money. |
Cost of Funds: A Growth Guarantee Scheme loan carries a fixed rate for the term, so a new business knows what its repayments will be from day one, which is genuinely useful when cash flow is still unpredictable. Each lender still has different rates, and our partners can check the best ones for your circumstances. | Cost of Funds: New businesses tend to be priced higher than established ones with a few years of accounts behind them. Rates in the market currently start from around 5% flat per annum, but a new business is more likely to be offered something above that unless the Growth Guarantee Scheme applies. |
Acceptance Likelihood: Asset finance is generally easier for a new business to get accepted for than an unsecured loan, because the asset itself is the lender's security. | Acceptance Likelihood: A new business with no assets to secure against and no trading history will have a narrower set of options. It's worth being honest early about which routes are realistic, rather than applying broadly and collecting rejections. |
Choosing the Right Structure
There are three routes worth understanding as a new business: a business credit card, asset finance, and a loan backed by the Growth Guarantee Scheme. Which one fits best usually depends on how much you need, whether there's an asset involved, and how established the business already looks on paper.
A Closer Look at Your Options
Business Credit Cards for New Businesses
A business credit card is often the first facility a new business can actually get, and it's worth treating as a starting point rather than a destination. Some lenders, for example Funding Circle, use a smaller facility like this to build a track record with a newer business before considering it for a larger loan later on. The amounts available are usually modest, which suits smaller, short-term costs rather than a major purchase. Rates on business credit cards can be high compared with secured finance, so carrying a balance for long periods tends to be an expensive way to fund the business.
Asset Finance for New Businesses
Asset finance is generally the 'easier' route to acceptance for a new business, because the equipment, vehicle or machinery being financed acts as the lender's security. If repayments stop, the lender has something concrete to recover, which makes them more willing to lend to a business without years of accounts behind it. It suits a business that needs to buy something specific to operate, rather than general working capital. Most agreements will still look at the director's personal credit and may ask for a personal guarantee alongside the asset itself, so it isn't entirely risk-free just because there's security involved.
The Growth Guarantee Scheme
If a straightforward loan is what you need, the Growth Guarantee Scheme could be the best bet for a new business. Under the scheme, the government underwrites 70% of the loan to the lender, which makes lenders considerably more willing to say yes to a business that wouldn't otherwise meet their normal criteria. That government backing doesn't remove the need for a personal guarantee in most cases. The scheme comes with a fixed rate for the term, which is useful for budgeting, even though the exact rate you're offered will still depend on your own circumstances and the lender.
The SMEmoney Process
Apply for finance via SMEmoney: Tell us about your business and what the finance is for.
View terms from a suitable panel: We show you terms from lenders suited to a business at your credit position and stage.
Speak to our broker team: One of our partner brokers talks through your situation properly, not just your application form.
They search the market for you: Your broker finds the best available terms for a business like yours, across appropriate solutions like cards, asset finance and loans.
Funding secured: Money lands in the business, and SMEmoney is paid a fee by the broker, never by you.
Frequently Asked Questions
What is SMEmoney? SMEmoney is a digital service, not a lender or a broker. We connect SMEs with specialist broker partners who have access to over 70 UK lenders between them, and using our service is free.
Can a new business with no trading history get finance? Often, yes, though the realistic options are narrower and terms are typically less favourable than for an established business. Asset finance and scheme-backed loans tend to be more achievable than an unsecured loan.
What's the easiest type of finance for a new business to get accepted for? Asset finance is generally the easiest, since the asset itself is the lender's security. Acceptance still depends on your credit position and the value of the asset involved.
Is a business credit card a good way to start? It can be, for small and short-term needs, and some lenders use it to build a track record with a newer business. Rates can be high, so it isn't usually the cheapest way to fund anything beyond the short term.
What is the Growth Guarantee Scheme? It's a government-backed scheme where 70% of the loan is underwritten to the lender by the government. It's typically the strongest route for a new business that needs a straightforward loan.
Do I still need a personal guarantee under the Growth Guarantee Scheme? In most cases, yes, even though the government is underwriting the bulk of the lender's risk. It's worth going in expecting this rather than being surprised by it.
What rate will a new business pay? It varies by lender and by how the business looks on paper. Rates in the market currently start from around 5% flat per annum, though a new business is more likely to be offered something higher unless the Growth Guarantee Scheme applies, which carries its own fixed rate.
Do I need to put down a deposit? Usually not mandatory, and it varies by lender and product. A personal guarantee is often asked for instead of a large cash deposit.
How fast can a new business get accepted? Business credit cards are often the fastest. Asset finance and loans, including Growth Guarantee Scheme applications, generally take longer, since a new business gets more scrutiny than an established one.
Can SMEmoney compare all these routes for me? Yes. One conversation with our broker panel can cover business credit cards, asset finance and Growth Guarantee Scheme loans together, rather than you approaching each one separately.
