The launch of the credit builder comes amid data showing that 65 per cent of UK startups are refused credit.
SME credit lender Cashplus is launching a credit builder tool for small and medium-sized businesses aimed at helping the 65 per cent of UK startups that are refused credit.
Called the Business Creditbuilder, the tool aims to help firms build their credit score while paying their standard account fees.
It structures Cashplus’s business customers monthly account fees as an interest free loan.
Account fees are structured as a one-year-fixed term loansthat is payable over 12 months at 0 per cent interest.
The 12 payments and repayment of the entire loan will be captured at Equifax with the aim of helping improve businesses credit score.
The tool will be available from next year.
Cashplus, which was granted a UK banking licence earlier this year, already offers a similar service for its consumer business.
According go to Cashplus, 65 per cent of new UK businesses are refused credit and there is an estimated £6bn “lending gap” between SME credit demand and available credit.
In addition, Cashplus is also launching a business credit card offering one per cent cashback for UK sole traders and small businesses who often struggle to secure affordable lending.
The company plans to deliver £5bn of new SME lending through the product over the next five years and the ambition to lend to 100,000 new customers in the next 12 months.
Rich Wagner, CEO, Cashplus: “Many start-ups need just a small credit facility to get them on their way, but this can often be almost impossible to come by without a credit history. This product is the answer to that “catch 22”.
"The work we have done with the team at Equifax means that early-stage businesses will now be able to make a meaningful difference to their credit score and combined with our new one per cent reward credit card for micro businesses creates a powerful tool for closing the £6bn SME lending gap.
“This is needed now more than ever with record numbers of new and small businesses leading the UK’s recovery from COVID-19, government support schemes coming to an end and high street banks continuing to poorly serve the SMEs that power our economy.”