New businesses can usually raise money in one of three ways: putting in your own funds, borrowing, or taking on investment. For borrowing, lenders look at what the money is buying, your personal credit history and your experience in the trade. With no accounts to show, a director’s guarantee is normally expected.
Asset finance is often the most realistic route for a start-up, because the item being funded gives the lender something tangible behind the agreement. A van, a machine or equipment that will earn from day one is a very different proposition to an unsecured loan for general costs, and it is usually assessed more favourably. Expect the trade-off to show up as a larger deposit, a shorter term or a personal guarantee, or some combination of the three.
Other routes exist outside brokered lending. There is a government-backed Start Up Loans scheme delivered through the British Business Bank: it is a personal loan taken out for business purposes, and mentoring is normally offered alongside it. Amounts, terms and eligibility are set by the scheme and change over time, so check the current position on gov.uk or with the British Business Bank direct. Grants, family investment and equity are further options. None of these are things a credit broker arranges, and your accountant is the right person to advise which structure suits your plans and your tax position.
The risks are real. Start-up borrowing is generally more expensive than lending to an established business, a personal guarantee puts your own assets at stake, and repayments fall due whether or not the business trades as you forecast. Build the repayment into your figures before you commit, not after.
CW Asset Finance is an independent credit broker, not a lender. We have a panel of more than 60 lenders, including some who consider newly formed businesses, but every decision rests with the lender and approval can never be guaranteed. Our new business asset finance page covers this in more detail.
This is general information, not tax advice. Confirm your own position with your accountant or HMRC.