Outdated business credit scoring models are shutting out promising UK startups from crucial funding, according to Swoop Funding chief executive Andrea Reynolds, who is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.
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