Start Up Loans
Personal loans for new businesses to begin trading, for owners unable to borrow from traditional lenders.
Start Up Loans are personal loans designed to help new businesses begin trading. They were created to support would-be business owners who have struggled to secure finance from traditional lenders.
They differ from small-business bank loans in that they are personal loans for business purposes. They are also unsecured, which means you don’t have to use your house or any other asset as security to receive the money.
Start Up Loans are provided by the Start Up Loans CompanyLink opens in a new window, which is funded by the UK Government. You can borrow between £500 and £25,000, payable over one to five years, at a fixed interest rate of 6% per annum.
When you apply, you’re paired with a dedicated business adviser, who supports you with completing your application form. If your application is successful, your loan comes with the option of 12 months of free mentoringLink opens in a new window.
To qualify for a Start Up Loan, you must meet the following criteria:
- You are aged 18 or over
- You live in the UK
- You are starting a new business, or your business is less than three years old
- Your business is/will be based in the UK
- You have the right to work in the UK
This depends on your business and how prepared you are. If you’re well prepared, you could receive your loan within a month. If you need more time to complete your application, it could take a lot longer.
You can apply for a Start Up Loan of between £500 and £25,000.
The loan is personal, rather than a business loan. Consequently, if there are partners in your business, you can each apply for a loan of up to £25,000. The maximum amount a single business can receive is £100,000.
- The loan is unsecured
- Fixed interest rate of 6% per annum
- Flexible repayment terms
- Support during the application process
- Free one-to-one mentoring for 12 months
Your credit rating
Start Up Loans are personal loans. The Start Up Loans Company will carry out a personal credit check when you apply, which could have an impact on your credit report. Similarly, if you fail to make your repayments (known as 'defaulting'), this could affect your credit report too.
If you default on your loan payments, the finance provider may issue charges. You are personally liable for these charges. This could also result in you being given a county court judgment (CCJ) or your case being referred to an approved debt collection agent.
Start Up Loans support most types of business. However, certain types of business are not eligible, including those that involve:
- property investment
- banking and money transfer services
You submit an initial application online. Then you’re assigned a business adviser to help you complete the full application.
The Start Up Loans Company will carry out a personal credit check, for which you’ll need to supply some of your business documents for assessment. These include a business plan and cashflow forecast.
If you’re approved for a loan, you’ll also be offered 12 months of free mentoring.
You can apply via the Start Up Loans Company websiteLink opens in a new window.
Other finance options
|Purpose of financessss||Working capital, product development, entry into new markets, build teams, increase sales|
|Amount of finance||Usually £15k-£500k, but large Syndicates may offer up to £2m|
|Duration of finance||Typically 3-8 years|
|Cost of finance||None|
|Time of finance||2-6 months|
|Business stage||Generally early stage, pre-revenue or pre-profit|
|Annual turnover||Less than £5m|
|Sectors||All sectors, but especially suitable for companies with a scalable business proposition|
|Purpose of financessss||Change in shareholder ownership, management buy-outs, acquisition, product development, entry into new markets|
|Amount of finance||£10m-£50m|
|Duration of finance||3-5 years|
|Cost of finance||Monitoring and director fees; loan note interest|
|Time of finance||Minimum of 3 months but can take up to a year|
|Business stage||Mature and growing; profitable|
|Business stage||Established with assets and a trading history|
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