Traditional credit scores are locking in UK startups, warning Swoop to fund CEOs
Swoop funding CEO Andrea Reynolds said outdated business credit scoring models are closing promising UK startups, urging culture and systematically to rethink the reality of real entrepreneurs.
Reynolds said the old systems used by lenders “inherently lean towards more mature businesses” and could not illustrate a unique overview of early-stage companies.
“Historically, credit scores have been designed for established companies with long-term records, stable cash flow and detailed accounts,” she explained. “This works for established companies, but it fails new businesses that simply don’t have time to build that footprint.”
This “thin document” problem, startups have little formal credit history, meaning many innovative companies are considered incomprehensible or too risky and are denied access to debt funds.
Attempts to modernize scoring through AI, open banking and alternative data are underway, but Reynolds said data quality, transparency and the risk of “new forms of bias” remain barriers. “When innovation exceeds infrastructure, it’s a startup that pays the price,” she added.
Swoop’s funding proposition changes in two aspects: practical steps to help founders build credit information early and carry out systematic reforms to the credit model. On the practical side, Reynolds recommends opening a commercial bank account, registering a company phone line, removing a commercial credit card and establishing a supplier credit line, while separating individual and corporate finances and paying on time.
She also advocates for the government’s launch of loan schemes, which provide low-interest lending and guidance, but warns that cultural perceptions of debt must change. “Many entrepreneurs, especially women and underrepresented founders, still believe that businesses borrow through personal debt scope – in fact, corporate capital is an investment that can generate returns.”
Reynolds believes that the scoring system must adapt to the “messy, iterative” nature of startups by considering real-time performance, creating separate models for pre-revenue companies, and rewarding strong founder behaviors and growth signals.
“If we want to boost economic growth, we need a financial infrastructure, not just paperwork,” she said. “Capital is not just cash flow, it’s about confidence – now too many great founders are excluded from the systems designed to support them.”
