What is a start-up loan?

If you have a great business idea, or have been trading for less than 36 months, and are looking for finance and support to help develop your business Start Up Loans could help.

Funded by the British Business Bank, Start Up Loans is a national scheme to provide advice, loans and mentoring to start-up businesses.

Partners in a business can individually apply for up to £25,000, with a maximum of £100,000 per business. The loan is unsecured, so there’s no need to put forward personal assets or guarantors to support an application, although borrowers may be liable in the event the loan is not repaid.

In addition to finance, successful applicants receive 12-months of free mentoring and business offers to help them succeed.

Applicants can apply for a start-up loan via Start Up Loans or one of their delivery partners.

Terms of the start-up loan

• The start-up loan is taken as a personal not a business loan.
• The rate of interest charged is a flat 6%.
• Borrow up to £25,000 per director up to four directors.
• Repayment terms up to five years.
• Capital repayment holidays are available in the first year.

Support and the Open University Partnership 

Pre-loans support is available where a start-up loans adviser can talk through business plans, cashflow and how funding actually works to become ‘credit ready. Post-loan support is also available via mentoring to provide the best chance of success in the first years of trading

Further, in partnership with the Open University, a number of training modules are available free of charge to loan applicants on areas such as:

• Entrepreneurship
• Career and Leadership
• Finance and Accounting
• Marketing and Commercial Awareness
• Project Management
• Find out more about the Learn with Start-Up Loan courses.

More information

Personal guarantees, security and credit checks

No personal guarantees are taken from the business owner, or security over any assets owned but the entrepreneur is personally liable for the borrowing. The pre-loans process guides the client through the implications of taking a start-up loan.

Standard credit checks will be carried out on the individual(s) but the primary assessment in terms of a lending decision is on the business itself, the business plan and repayment capability.

How long does the process take?

It depends on the approval journey between the start-up loans company advisers and the business owner, therefore the range of the timeframe from end to end can be as short as five days or stretch to 18 months in an extreme case.

How are the loans delivered?

There are 23 delivery partners, national, regional and specialist, such as The Princes’ Trust. Delivery partners can be approached directly or allocated to via the Start Up Loans Company. 

Other sources of start-up finance

If the start-up loan scheme isn’t appropriate for you, an alternative option is a loan from a responsible finance provider.

They provide fair and affordable loans to new and existing businesses across the UK and are specifically designed to help the businesses that are viable, but unable to get the finance they need elsewhere. 

To find your nearest responsible finance provider visit findingfinance.org.uk.

Other sources of early-stage finance for start ups include seed finance, which offers equity options.

Next steps

• To find out more, visit the Start Up Loans website.
• How to find the right financial advice