Start-up loans overview

Start-up loans are available to ‘early-stage businesses’ i.e. those under two years old, not just businesses who have not yet started trading. The role of the British Business Bank is to support SMEs where entrepreneurs may not be readily able to access start-up finance. The key driver to successfully obtaining a start-up loan from the start-up loans company is the support offered throughout the process.

Terms of the start-up loan

• Critically, 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 4 directors
• Repayment terms up to 5 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.

Useful information

What qualifies as a business ‘under two years old’

When the business starts trading or is incorporated to start trading; if the business has been dormant for a prior period this would not affect the two-year eligibility criteria. 

Personal guarantees, security & 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.

Can my client borrow from a high-street bank?

Yes, start-up funding is available from high-street lenders so businesses can of course approach these; the level of support available from the British Business Bank offering is one of the key differences that is attractive to entrepreneurs starting out. 

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 e.g. The Princes’ Trust. Delivery partners can be approached directly or allocated to you via the Start Up Loans Company. 

Further guidance

Watch the webinar with Richard Bearman

Learn more about the Start-Up Loans Company