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The Finance Team
11 July 2025, 15:24

Can Startups Qualify for Commercial Finance in the UK?

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Launching a new business in the UK is an exciting but challenging journey. One of the biggest hurdles for startups is securing the right funding to turn an idea into a sustainable operation. Many entrepreneurs assume that commercial finance is reserved only for established companies with years of trading history, but that’s not entirely true. While it can be more difficult for startups to access funding, there are multiple commercial finance options available — provided you know where to look and how to prepare.

The Challenges Startups Face in Securing Finance

Lenders assess risk before approving any loan. For startups, this poses a problem because they often:

  • Lack a proven trading history

  • Have limited or no credit record

  • May not yet demonstrate stable cash flow

  • Rely heavily on projections rather than actual financial performance

This higher level of perceived risk means startups may encounter stricter lending criteria, higher interest rates, or requirements for personal guarantees.

Types of Commercial Finance Available to Startups

Despite these challenges, several commercial finance solutions are accessible to new businesses in the UK:

Startup Loans (Government-Backed)

The UK Government’s Start Up Loans scheme provides unsecured loans (up to £25,000) with a fixed interest rate. These loans are designed specifically for new entrepreneurs and come with mentoring support.

Unsecured Business Loans

Some alternative and specialist lenders provide unsecured loans to startups, usually based on the business plan and the personal credit history of the directors. These are faster to obtain but often come with higher interest rates.

Asset Finance

If your business needs equipment, vehicles, or machinery, asset finance allows you to acquire these without large upfront payments. The equipment itself acts as security for the loan, reducing risk for the lender.

Invoice Finance (for Early-Stage Businesses with Clients)

Once you start trading, invoice finance can provide working capital by advancing cash against outstanding invoices. This can improve liquidity without taking on traditional debt.

Secured Loans

If you or your business owns valuable assets (such as property), secured loans may be available. These loans generally offer better rates but carry the risk of losing the asset if repayments are not met.

Equity Finance

While not debt-based, equity finance (such as angel investors or venture capital) is another route startups pursue. Although it involves giving up a share of ownership, it can provide significant growth capital without immediate repayment obligations.

Key Factors Lenders Consider

When assessing a startup for commercial finance, lenders will typically look at:

  • Business Plan: A detailed and realistic plan outlining revenue forecasts, market analysis, and growth strategy.

  • Director’s Credit History: Personal financial history often substitutes for the company’s limited trading record.

  • Collateral or Guarantees: Availability of security or willingness to provide personal guarantees.

  • Sector Risk: Some industries are considered higher risk than others, which impacts loan eligibility.

The Role of a Commercial Finance Broker

For startups, navigating the finance landscape can be overwhelming. A commercial finance broker plays a crucial role in:

  • Identifying suitable lenders open to startup funding

  • Structuring applications to increase approval chances

  • Negotiating terms and interest rates on behalf of the client

  • Offering impartial advice on whether debt or equity is the best route

By leveraging broker expertise, startups can access finance options they may not find independently.

Final Thoughts

Yes — startups can qualify for commercial finance in the UK, but the path is not as straightforward as it is for established firms. With the right preparation, strong planning, and expert guidance, early-stage businesses can secure the funding they need to launch and grow.

Working with a commercial finance broker ensures you explore every available option and present your business to lenders in the strongest possible light.