Asset Finance for New Companies Under Two Years Old

Asset finance is available to UK companies under two years old, though the lender pool shrinks and personal guarantees become standard. Specialist funders like Shire, Close Brothers, and Aldermore regularly fund newly incorporated businesses if directors have clean credit, the asset holds resale value, and the deal makes commercial sense. Expect deposits of 10-20% and slightly higher rates than established firms pay.

Why new companies struggle with mainstream asset finance

High street banks usually want two full sets of filed accounts before they'll commit to equipment funding. That's a problem if you incorporated last March and Companies House only shows one abbreviated set. The underwriting models at Barclays, NatWest, and HSBC weight trading history heavily, so a 14-month-old limited company often gets declined regardless of how strong the contracts pipeline looks.

Specialist asset finance houses work differently. They lend against the asset itself, not just the balance sheet. A £45,000 CNC machine with a known resale value of £28,000 after three years is collateral the lender can repossess and sell. That changes the risk calculation. The funder cares about the director's track record, the trading bank statements they can see, and whether the asset will generate revenue from day one.

The Financial Conduct Authority regulates consumer hire and some smaller business agreements, though most commercial asset finance over £25,000 sits outside the Consumer Credit Act. You can check a lender's permissions on the FCA Financial Services Register before signing anything.

What lenders actually assess for sub-two-year companies

Underwriters look at five things when a young company applies. None of them is "how long have you been trading" in isolation, despite what the rejection letters from high street banks suggest.

• Director experience in the same sector, ideally 5+ years
• Personal credit files of all directors and shareholders above 25%
• Bank statements covering the trading period to date, usually 3-12 months
• Forward order book, signed contracts, or recurring revenue evidence
• The asset's residual value and how easily it can be resold

A director who spent twelve years as an operations manager at a logistics firm before setting up their own haulage company will get funded for a tractor unit far quicker than a first-time founder buying the same vehicle. Sector continuity matters enormously. The same logic applies across Asset finance for plant machinery deals, where lenders favour applicants with verifiable hands-on experience operating similar kit.

Personal guarantees: what to expect

Almost every asset finance agreement for a company under two years old will require a personal guarantee (PG) from the directors. The PG typically covers the full outstanding balance, though some lenders cap it at 20-40% of the original advance. Read the wording carefully. A continuing guarantee survives the asset being repossessed, meaning you could still owe money after the lender has sold the kit at auction.

Deposits and rate premiums

Expect to put down 10-20% on most deals, against the 0-10% an established business might negotiate. Annual percentage rates run 2-4 points higher than the equivalent contract for a five-year-old company. On a £60,000 advance over five years, that's roughly £150-£250 extra per month in finance costs.

Lenders who fund companies under two years old

The market splits into three tiers: challenger banks with asset finance arms, specialist independents, and broker-only funders. Each has different appetites for new-company risk.

Aldermore

Aldermore will look at companies trading from 12 months upwards, and occasionally from six months if the directors have strong sector backgrounds. They fund hire purchase and finance lease deals from £10,000 to £1 million, with a strong appetite for commercial vehicles, yellow plant, and manufacturing equipment.

Close Brothers Asset Finance

Close Brothers runs separate divisions for transport, construction, print, and engineering. Each has its own underwriters who understand the kit. For a young company buying a £180,000 excavator, the construction team will assess the operator's CSCS card history and previous employers, not just the filed accounts.

Shire Leasing

Shire takes a flexible view on new-start applicants, particularly for soft assets like IT, EPOS, and gym equipment. Their typical deal size sits between £2,000 and £150,000. I've covered their proposition in more detail in the Shire Asset Finance review.

Paragon Bank

Paragon's asset finance team funds equipment from £25,000 upwards. They want a minimum of 12 months trading and will scrutinise gross margin trends in the management accounts. For technology-heavy purchases, their structured finance team can package larger deals into stepped payment schedules.

Lombard

Part of NatWest Group, Lombard is more conservative on new companies than the independents, though they do fund them where the parent group already banks the business. Their strength is large-ticket deals above £250,000. The Lombard Asset Finance vs Shawbrook Asset Finance Comparison piece breaks down where each one wins.

Shawbrook Bank

Shawbrook's asset finance division focuses on mid-ticket deals between £25,000 and £2 million. They'll fund 12-month-old companies on hard assets like vehicles and machinery, though IT and software refinancing is harder to land without 24 months of trading.

Time Finance

Time is broker-distributed and tends to price slightly higher than the banks, but they say yes to deals others decline. Useful for directors with a thin credit file or a previous CCJ that's been satisfied.

Asset types and how they affect approval odds

Not all kit is equal in the eyes of an underwriter. Hard assets with active secondary markets are easier to finance than bespoke or fast-depreciating equipment.

Farming start-ups have a slightly easier route because dealers like Claas and John Deere run captive finance arms that price aggressively on their own kit. A full overview sits in our guide to Asset finance for agricultural machinery, including the dealer subvention schemes worth asking about.

Documents you'll need to prepare

The application pack for a young company is heavier than for an established one. Get this ready before approaching lenders and you'll cut decision times from weeks to days.

• Last 3-12 months of business bank statements (PDF, direct from the bank portal)
• Most recent filed accounts or management accounts if not yet filed
• Aged debtor and creditor reports
• Director CVs showing sector experience
• Personal asset and liability statements for each director
• Three months of personal bank statements for the lead director
• Pro-forma invoice or quote for the asset being purchased
• Forward order book or signed customer contracts where available
• VAT returns if registered

Management accounts carry real weight here. A company that produces monthly P&L and balance sheet figures from Xero or QuickBooks looks more professional than one submitting a screenshot of the bank balance. If you've not set this up, do it before you apply.

Cost comparison: new vs established company pricing

The premium for being under two years old is real but rarely deal-breaking. Run the numbers through an Asset Finance Calculator before signing to see the total cost in pounds rather than just the headline rate.

That £134 monthly difference between the most established and the newest borrower equals roughly £8,000 over the full term. Annoying, but workable if the asset generates the revenue projected. Refinancing after 18-24 months of clean payment history often unlocks better pricing, and our Business loan refinance calculator barclays helps model whether switching makes sense.

Sector-specific routes worth knowing

Some sectors have specialist funders who actively prefer new-company applicants because their underwriting is built around the kit, not the accounts.

IT and technology

Refresh cycles drive demand for it equipment financing, and specialists like BNP Paribas Leasing Solutions and CHG-Meridian fund laptops, servers, and network kit on operating leases. New companies often qualify if the equipment will be used by named end-clients with strong covenants.

Healthcare and dental

Medical practices set up by experienced clinicians get funded readily. Lenders treating medical equipment leasing understand that a newly incorporated dental practice run by a GDC-registered dentist with eight years of associate experience is low risk, regardless of the company age.

Fitness and leisure

Gym openings have a higher failure rate, so funders look closely at the site, the lease terms, and the membership model. Operators familiar with commercial fitness equipment financing price accordingly, with deposits often pushed to 20-25% for new operators.

Agriculture

Family farm successions and diversification ventures count as "new companies" on paper but carry generations of operational history. Specialists in agricultural asset management recognise this and underwrite the family unit, not just the Ltd.

Common reasons new-company applications get declined

Most rejections come down to fixable problems, not the company age itself. Here's what trips up applicants most often.

• Director with adverse credit, even historic and satisfied
• Bank statements showing returned direct debits or gambling transactions
• Asset value materially higher than the company's monthly turnover supports
• Mismatch between the director's prior experience and the asset purpose
• Phoenix companies where a previous business failed within five years
• Incomplete or inconsistent figures across the application pack

Phoenixing is a particular issue. If you closed a previous Ltd via creditors' voluntary liquidation and incorporated a new one doing similar work, expect intense scrutiny. The Insolvency Service publishes director disqualification records that lenders cross-check.

Alternatives if asset finance doesn't work yet

Plan B options exist for companies that can't yet land traditional hire purchase or lease deals.

The Recovery Loan Scheme has been replaced by the Growth Guarantee Scheme, which provides a 70% government guarantee to participating lenders on facilities up to £2 million. Several asset finance providers use it specifically to fund younger companies they'd otherwise decline. A Term Loan structured under the scheme can buy equipment outright when leasing isn't on the table.

Operating leases through equipment dealers are another route. Manufacturer-backed finance from companies like Caterpillar Financial or Volvo Financial Services often approves new-start operators their banks won't touch. Sale and leaseback on existing assets the company already owns can also release cash, though tracking Year-over-Year (YOY) depreciation matters when negotiating the buy-back value.

Broker-introduced deals through specialist equipment leasing and finance companies often unlock funders that don't deal direct. A good broker will know which underwriter at which lender will look at a 14-month-old company in your specific sector.

Practical next steps

If you're under two years old and need equipment finance, work through this sequence rather than firing applications at every lender on Google.

• Pull your personal credit report from Experian or Equifax and clear any errors
• Get six months of management accounts produced and signed by your accountant
• Write a one-page business summary explaining the asset purchase, expected revenue, and director sector experience
• Approach two specialist asset finance brokers and one direct lender simultaneously
• Negotiate the deposit down once you have a written offer in hand
• Compare total cost in pounds, not just APR, before signing

Most decisions land within 5-10 working days once the pack is complete. Drawdowns follow 3-5 days after that, assuming the supplier invoice and proof of delivery come through cleanly. Companies that prepare properly often find the rates aren't far off what an established business pays, particularly on hard assets with clear resale markets. The age of your Ltd matters less than the strength of the people running it and the quality of the kit you're buying.