Cash is runway — do not spend it on hardware
The single scarcest resource in a young business is cash, and it decides how many months you have before the next raise or before profitability. Dropping a five-figure lump sum on laptops, a server and networking in month one shortens that runway for assets that depreciate the moment they are unboxed. Financing keeps that capital in the bank working on the things that actually move the business — hiring, product, customers — while the equipment is paid for out of the monthly cash the business is starting to generate. Our guide to finance versus paying cash lays out the trade-off in full.
Newer businesses: deposit or director guarantee
Companies trading under two years have a shorter track record for a funder to assess, so an early-stage agreement is often structured a little differently — a modest deposit or a personal director's guarantee can unlock terms that would otherwise be harder to reach on limited filed accounts. That is normal for a young company and not a barrier; it simply reflects the shorter history. Being clear about the arrangement up front means there are no surprises when the paperwork is drawn up.
- •Under two years trading is fine — expect a slightly different structure
- •A modest deposit can improve the terms available
- •A director's personal guarantee is a common alternative
- •Terms confirmed after credit assessment, so plan for both outcomes
Scale the kit as the headcount grows
A startup's IT needs are a moving target — five people this quarter, fifteen the next — so a rigid up-front purchase rarely fits. Financing lets you equip the team you have now and add laptops and infrastructure as you hire, keeping each addition to a manageable monthly rather than a fresh capital ask. A typical early build of around £12,000 over 48 months lands near £258 a month, subject to credit assessment; run your own number in the calculator and it will size instantly.
Spend raised money on growth, not depreciating kit
When you have raised, that capital was priced against a growth plan — hiring, product and go-to-market — not against a rack of hardware that loses value the day it ships. Investors would generally rather see the round burned on things that compound than on desks full of laptops, so keeping the equipment on a monthly and the cash on the balance sheet tends to read well at the next board meeting and the next raise. It also keeps the metric that matters — burn — cleaner: a steady rental is far easier to model in a runway forecast than a lumpy capital spike that distorts a month's numbers.
- •Keep raised capital pointed at hiring, product and growth
- •A steady rental models cleanly into a burn forecast
- •Avoid a capital spike that distorts a single month
- •Reads well to a board weighing how the round is spent