Start Up Loans

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What is a Start Up Loan?

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 Company, which is funded by the UK Government. Borrowers can access 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 mentoring.

Key requirement

You’re either starting a new business or have been trading for less than two years

Key benefit

The loan is unsecured, so you don’t need to provide assets as security

Key consideration

This is a personal loan, used for business purposes, so you’re personally liable for repaying the full loan plus any interest

Since 2012, the Start Up Loans Company has provided funding to support over 55,000 business ideas

Am I eligible to apply for a Start Up Loan?

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 two years old

Your business is/will be based in the UK

You have the right to work in the UK

How do I apply for a Start Up Loan?

  1. You submit an initial application online.
  2. You’re assigned a business adviser to help you complete the full application.
  3. You’ll go through a personal credit check and will 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 for a Start Up Loan via the Start Up Loans Company website.

How long will it take to get a Start Up Loan?

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.

How much money can I apply for?

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 apply individually for a loan of up to £25,000. The maximum amount a single business can receive is £100,000.

Benefits of Start Up Loans

The loan is unsecured

Fixed interest rate of 6% per annum

Flexible repayment terms

Support during the application process

Free mentoring

Risks of Start Up Loans

Your credit rating

Start Up Loans are personal loans. A personal credit check will be carried out when you apply, which could impact your credit report. Similarly, if you default on payments, this could affect your credit report.

Possible charges

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 a county court judgment (CCJ) or your case being referred to an approved debt collection agent.

Are some businesses excluded from Start Up Loans?

Start Up Loans support most types of business. However, certain types of business are not eligible, including those that included property investment, banking and money transfer services, and gambling.

View the full list of excluded businesses here

Is a Start Up Loan right for me?

About your business

Business stageYet to start or has been trading for less than two years
Annual turnoverAny
SectorsSome exclusions apply (see here)
RegionsAny

What’s my next step?

Other finance options

IPO
Equity
An IPO (or Initial Public Offering) is when a business sells shares via the public markets, such as the Main Market or AIM operated by the London Stock Exchange.
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Overdraft
Debt
Businesses can borrow money on demand up to the limit of their overdraft. Overdrafts can be expensive, but a business will only pay interest on the amount they actually borrow.
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Direct Lending Fund
Debt
A business borrows money from a fund and repays it with interest. A fund may be able to provide loans where a bank will not.
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