Finance for startupshonest about what's actually fundable

The situation

A pre-revenue or early-stage business needs capital before it has the trading history that most commercial lending is built to assess — equipment to start operating, working capital to get through the first months, or a facility that doesn't depend on financials that simply don't exist yet. Founders often come to us after being told to come back when they have two years of financials, which isn't useful advice when the money is needed now, to become a business with two years of financials in the first place.

Founders in this position are often personally strong candidates for finance — stable income, a clean credit history, sometimes property already — while the business itself, being new, offers nothing a lender can independently assess yet. The mismatch is between the founder's own position and the entity's, and most lending here is really an assessment of the former with a facility written to the latter.

Why the first answer is often no

Commercial lending is fundamentally built around assessing a demonstrated ability to repay, and a startup has, by definition, little or no trading history to demonstrate that with. Most lenders' standard criteria simply don't have a category for "this doesn't exist yet but will work," which means a startup approaching a mainstream lender is often being assessed against criteria it was never going to meet, rather than genuinely considered and declined on its actual merits.

How it gets funded

Asset and equipment finance is typically the most accessible option, since the asset itself provides security regardless of the business's trading history, assessed partly on the director's personal financial position. Unsecured business loans are available at modest amounts, usually backed by a personal guarantee from the director given the absence of trading history. Where a director has property to offer, a private first mortgage can fund a larger requirement against that security rather than the business itself.

We're direct about which of these, if any, genuinely fits a given startup's situation, rather than encouraging an application against a product that was never going to say yes. A personal guarantee is standard practice here, not a sign the deal is unusually risky, and the conversation is generally more about what security or asset backs the facility than about the business plan itself, at least until there's trading history to assess alongside it.

A startup with a signed contract, a confirmed customer or a purchase order in hand is often in a materially stronger position than one relying purely on projections, since that document gives a lender something concrete to assess beyond the founder's own credit and security. Where one exists, it's worth putting in front of a lender even at the earliest stage.

What to have ready

Details of any equipment or asset to be financed (including supplier quotes), the director's personal financial position, entity documents, and a short, realistic explanation of the funding purpose and how it will be repaid. Where there's a co-founder or second director, their position is relevant too, since a personal guarantee is often required from each party with equity in the business, and any signed contracts or purchase orders should be included from the outset.

Working with us

We ask early on what security or asset is available, because that answer generally determines what's realistic far more than the business plan does at this stage. Where nothing fits yet, we say so plainly rather than running an application that wastes your time and a lender's, and we'll tell you what would need to change — typically a few months of trading, or additional security — for the picture to improve.

As the business moves past its first months of trading, the options open up meaningfully, and we stay in touch so the next conversation starts from an improved position rather than from scratch. Where you've been introduced to us by an accountant or adviser helping structure the business, we keep them in the loop throughout rather than working around them, and we're glad to speak with your co-founders directly where more than one person carries a personal guarantee, so everyone with a stake in the decision hears the same information at the same time.