Outdated business credit scoring models are shutting out promising UK startups from crucial funding, according to Swoop Funding chief executive Andrea Reynolds, who is urging a cultural and systemic rethink to match the realities of modern entrepreneurship.
Reynolds said the legacy systems used by lenders are “inherently biased towards more mature businesses” and fail to account for the unique profiles of early-stage companies.
“Historically, credit scores were designed for established firms with long track records, steady cashflow and detailed accounts,” she explained. “That works for mature companies, but it fails new businesses that simply haven’t had time to build that kind of footprint.”
This “thin-file” problem, where startups have little or no formal credit history, means many innovative firms are deemed unscorable or too risky — and are denied access to debt funding.
Attempts to modernise scoring through AI, open banking and alternative data are under way, but Reynolds said data quality, transparency and the risk of “new forms of bias” remain obstacles. “When innovation outpaces infrastructure, it’s startups that pay the price,” she added.
Swoop Funding is advocating for change on two fronts: practical steps to help founders build their credit profiles early, and systemic reforms to credit models. On the practical side, Reynolds recommends opening a business bank account, registering a company phone line, taking out a business credit card, and establishing supplier credit lines — all while keeping personal and business finances separate and paying on time.
She also champions the government’s Startup Loan Scheme, which offers low-interest borrowing and mentoring, but warns that cultural perceptions around debt must shift. “Many entrepreneurs, particularly women and under-represented founders, still view business borrowing through the lens of personal debt — when in reality, capital for a business is an investment that can generate returns.”
Reynolds argues that scoring systems must adapt to the “messy, iterative” nature of startups by factoring in real-time performance, creating separate models for pre-revenue firms, and rewarding strong founder behaviour and growth signals.
“If we want to fuel economic growth, we need a funding infrastructure that recognises potential, not just paperwork,” she said. “Capital isn’t just about cash flow, it’s about confidence — and right now too many brilliant founders are being excluded from the very system designed to support them.”
