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 two 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 for a Start Up Loan via the Start Up Loans Company websiteLink opens in a new window
Other finance options
|Purpose of financessss||Acquisition, product development, new markets|
|Amount of finance||Up to £50m on AIM; unlimited on the Main Market|
|Duration of finance||10 years +|
|Cost of finance||You will need to appoint an accountant, a law firm and usually a PR firm. Assume this will cost 8% of the amount you hope to raise|
|Time of finance||IPO processes takes 10-12 weeks; but planning and negotiations can take 12-18 months|
|Business stage||Established and growing|
|Annual turnover||Over £5m; this does not apply to healthcare businesses|
|Sectors||All sectors; healthcare and tech may be able to list earlier in their lifecycle than other sectors|
Leasing & Hire Purchase
|Business stage||Early stage to established with a trading history|
|Business stage||Established with a trading history|
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