Does it cost more to borrow as a new company?

2 min read

Thin history = higher rateLess to assess

More risk marginPriced for uncertainty

Offset with evidencePlan, security, guarantee

Improves with timeHistory lowers cost

Why new companies pay more

A lender prices the risk of a default, and a new company gives it little to go on — no years of filed accounts, no long track record of paying commitments. That uncertainty is priced as a higher margin, so newer businesses typically borrow at higher rates than established ones with the same figures. It is not a judgement on the business; it is the cost of the lender not yet being able to see a history. See how the rate is set and the startup loan guide.

Offsetting the new-company premium

Newer businesses can bring the cost down by giving the lender other things to assess. A strong, evidenced business plan, security over an asset, a personal guarantee, healthy bank data through open banking, and a director with a good personal credit record all reduce the uncertainty and the margin. Borrowing a modest amount over a shorter term also lowers the lender's exposure and can sharpen the rate.

It improves with time

The new-company premium fades as history builds. Each year of filed accounts and on-time payments gives lenders more to assess and pulls the rate down — so good early conduct is an investment in cheaper future borrowing. If the first loan is dear, treat it as building the record that makes the next one cheaper. See improving creditworthiness.

See what your new company qualifies for with a firm quote — apply — and compare on total cost.

Frequently asked questions

Can a brand-new company get a business loan at all?

Often yes, though usually at a higher rate and sometimes with security or a personal guarantee, because there's little trading history to assess. A strong business plan, good director credit, and healthy bank data all help. Specialist startup finance exists too. The cost is higher than for an established firm, but a new company with a solid case and some security can usually borrow.

How long until my company borrows at normal rates?

It improves steadily rather than at a fixed point — each year of filed accounts and on-time payments gives lenders more to assess and lowers the margin. Many businesses see meaningfully better rates once they have a couple of years of solid accounts and a clean payment record. Good conduct from the start shortens the journey, so treat early borrowing as building the history that cheapens later borrowing.