Stagnant Credit Scores Impeding Expansion of UK Startups, Alerts CEO of Swoop Funding

In a recent speech at the BCC Global Chamber Connect seminar on June 23, 2025, Andrea Reynolds, CEO and founder of fintech platform Swoop Funding, raised concerns about the current state of the finance industry and its impact on new business launches.

Reynolds warned that unless the finance industry reforms how it assesses risk, the slowdown in new company launches could deepen. According to the latest count, the UK has 5.6 million active businesses, but the number of new companies launching each year is decreasing. In 2024, only 846,000 new companies launched, representing a 3% drop from the previous year.

Reynolds also addressed the issue of gender inequality in access to funding, claiming that the mindset gap is costing the UK millions in lost innovation due to women falling behind in seeking funding. She encourages startups to build their credit profile by opening a business bank account, registering a company phone number, applying for a business credit card, and establishing credit lines with suppliers.

Reynolds advocates for a two-pronged approach of practical empowerment and systemic change to support startups. She supports the Startup Loan Scheme, a government-backed initiative that offers low-interest borrowing and access to mentorship. However, she emphasizes that there's not sufficient awareness of funding options for startups, even with the newly announced Backing Your Business scheme.

Reynolds believes that current credit scoring models are biased towards more mature businesses and do not adequately reflect the unique needs and risk profiles of modern startups. Historically, business credit scores were designed for established companies with long track records, stable cash flow, and neatly filed accounts. However, the lack of a long track record and stable cash flow in new and early-stage businesses creates a 'thin-file' or 'no-file' problem, making them unscorable or high-risk.

Reynolds proposes empowering startup founders through fast, frictionless financial support—enabling resilience without the barriers of traditional credit scoring models that exclude modern businesses from funding. She suggests that credit scoring models must evolve to account for the messy, iterative, risk-taking nature of startups. Real-time business performance, separate lending models for pre-revenue businesses, rewarding strong founder behavior and growth signals, and rebuilding trust in borrowing as a tool for growth are aspects that Reynolds believes should be included in the evolution of credit scoring models.

Reynolds also addressed the issue of mindset, stating that many entrepreneurs, especially those from underrepresented groups, still view borrowing as personal debt, leading to a mindset gap. She encourages startups to maintain a clean credit history, pay on time, and separating personal and business accounts to build a strong credit profile.

Some progress is being made in credit modeling through AI, open banking, and alternative data sources, but issues of data quality, transparency, and potential new forms of bias still exist. Reynolds claims that capital isn't just about cash flow, but also about confidence, and that too many brilliant founders are being excluded from the system meant to support them. She emphasizes that the finance industry must adapt to the needs of modern businesses to foster innovation and growth.