Tapping into green finance

Green finance may not be a silver bullet for everything or everyone, but it needn’t be out of reach either

Green or sustainable finance can feel like an option that’s reserved for big organisations with entire departments dedicated to ESG (environmental, social, governance) strategies and carbon accounting. But that’s changing. More SMEs are starting to access funding to help them go greener, says Andrea Reynolds, founder and CEO of Swoop, a fintech platform that helps SMEs access funding.

‘Green finance isn’t just for big corporates anymore,’ she says. ‘We’re seeing much more practical, accessible options for SMEs now.’ These range from asset finance for things like EVs and solar panels, or commercial loans tied to energy efficiency projects, to grants for decarbonisation or innovation, green equity funding for purpose-led companies, and discounted loans for green upgrades.

So, what might that mean for your business?

What is green finance?

Green finance refers to financial activities, investments, and lending that support environmentally sustainable projects and businesses.

It’s essentially the part of the finance world focused on enabling the transition to a low-carbon, climate-resilient economy.

It typically includes:

• Green bonds and loans – financing for renewable energy, energy-efficient buildings, sustainable transport, or other low-carbon projects.
• Investment in climate-friendly businesses – such as clean tech, sustainable agriculture, or circular economy initiatives.
• Risk management and disclosure – factoring climate risks (like flood or heat damage) into financial decision-making.
• Policies and incentives – government schemes or bank products that encourage sustainable practices.

The aim is to direct capital towards activities that reduce greenhouse gas emissions, protect biodiversity, or improve resource efficiency, while still delivering a return on investment.

Barriers exist, but not insurmountable

Getting green finance can still be tricky, warns Matthew Agarwala, professor of sustainable finance at University of Sussex Business School. ‘The key barriers SMEs face in accessing sustainable or green finance are scale, their capacity to engage, transaction costs, and matching,’ he explains.

In simple terms, most SMEs are too small to grab the attention of major investors. If you’re only looking for a relatively small loan to fund solar panels or an electric van, the admin costs, such as contracts, risk assessments, and reports, can seem disproportionately high. And if that funding also requires a bunch of ESG reports, emissions tracking or biodiversity policies, well… many SMEs don’t have the time or resources for that. ‘Most don’t really need one for their mainstream business,’ says Agarwala, ‘so to produce all this just to get access to different financial products seems like a bit of a faff. It’s unlikely to be the best use of their scarce time and resources.’

That said, the trend towards greater ESG reporting requirements on larger firms has created a workforce of professionals who can do ESG impact assessments. ‘So, there may be some scope for SMEs to do some headhunting, or for these people to sell their services to SMEs via consultancies,’ explains Agarwala.

However, he suggests a more practical approach: operate in a greener environment. If your electricity already comes from renewable sources, for example, your waste gets sorted sustainably and your suppliers are environmentally responsible, then isn’t your business greener by default? ‘Greening by default is better than defaulting by going green,’ he cautions.

Likewise, don’t wait for the perfect policy environment to make changes because, as Agarwala warns, governments can change their minds. ‘Companies are increasingly aware of the frequent policy changes – flip flops, delays, and watering down,’ he says.

He cites examples like delayed bans on gas boilers or EV targets, arguing that SMEs cannot afford to make major changes based on policies that may shift. Instead, focus on business cases that stand up even without subsidies or policy incentives.

What funders actually want

The good news is that not all funders expect you to have a full ESG strategy or a carbon footprint dashboard ready to go. ‘The main thing lenders and investors typically look for is clarity,’ says Reynolds. ‘They want to see that the money will be used for something that has a measurable environmental benefit, not just a vague “green” idea.’

That could mean switching to low-emission vehicles, upgrading your insulation, installing energy-efficient lighting, or even changing your packaging to reduce waste. ‘We’ve helped everyone from florists to logistics companies to retail shops access green funding,’ explains Reynolds. The key, she says, is to be specific: explaining how, why, and what kind of impact the change will have. You’ve got to show exactly what the money’s for and what kind of environmental improvement it will drive.

Some data helps. Reynolds says many lenders now expect some kind of tracking, whether that’s open banking, energy usage, or a carbon dashboard. Not having the right paperwork ready can be a major slowdown. Funders need to see that your business is viable and that you’re organised. Connecting your bank account and accounting tools, for example, can help build that confidence and Reynolds says platforms like Swoop can help businesses present themselves with the right data from the start.

Green finance may not be a silver bullet for everything or everyone, but it needn’t be out of reach either. With the right approach and a bit of preparation, green finance can work for your business.

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