Start Up Loans: Rates, Eligibility and How to Apply

What a Start Up Loan Does

A Start Up Loan is a personal, government-backed, unsecured loan. It is in your name, not the company’s. There is nothing to offer as security, and the government backing allows the lender to take on founders who would not pass a standard commercial credit assessment.

The loan range is £500 to £25,000 per applicant. If your business has more than one director or partner, each individual can apply separately. Up to four co-founders could each apply for £25,000, giving a business a total of up to £100,000.

The rate is fixed at 7.5% per annum, with repayment terms of one to five years. There are no application fees, no arrangement fees, and no early repayment charges. All successful applicants receive 12 months of free mentoring and business support.

The 7.5% rate was introduced in April 2026, up from the 6% rate the scheme had carried for most of its history. We’d note that many comparison sites and guides have not updated this figure. Any source still quoting 6% is out of date for applications submitted now.

Who Qualifies for a Start Up Loan

The scheme is designed for UK residents aged 18 or over who are starting a new business or are in the early stages of one that has not yet been trading for five years.

That five-year cut-off is more recent than most guides reflect. Until April 2026, the limit was three years of trading history. The extension to 60 months means businesses that started during or after the pandemic and are still finding their footing can now qualify where they previously could not.

You do not need a spotless credit history. The scheme exists precisely because early-stage founders often do not have the credit file that a commercial bank requires.

County court judgements or previous defaults do not automatically disqualify you. They will need to be explained, and the lender will assess whether they affect your ability to service a new loan on top of existing commitments.

If you are currently in a Debt Relief Order, you are not eligible.

We’d flag adverse credit entries as something to raise proactively with your adviser before the formal credit check, not hope goes unnoticed at assessment.

The scheme does not work for every type of business. Excluded categories include weapons manufacture, pornography, gambling, FCA-regulated financial services, property investment, drugs, charities, and agents acting for third parties. If your business sits in one of those categories, look elsewhere.

What You Need to Prepare Before Applying

This is where a lot of people underestimate the process. We’d describe it as substantive rather than complex: time-consuming, but manageable with the right preparation.

To get to a lending decision, you need three substantive documents: a business plan, a 12-month cash flow forecast, and a personal survival budget. You will also need three months of personal bank statements.

Business Plan

The business plan is a full document covering your business idea, target market, competition, operations, and financial projections. Templates are available from the Start Up Loans website and your assigned delivery partner.

It does not need to be polished, but it does need to show that you have thought seriously about how the business will work and where the money will come from. We’d recommend using the scheme’s own templates rather than starting from scratch.

Cash Flow Forecast

The cash flow forecast is a month-by-month projection for the first year. The assessment team will look at whether your projected revenues, costs, and loan repayments add up.

Forecasts that assume strong early revenue without supporting logic tend to attract scrutiny. We’d say the cash flow forecast makes or breaks most applications.

If you open the template on a Tuesday evening and find yourself stuck on month-one revenue with no acquisition plan behind it, that is the point to call your adviser, not to guess and submit.

Personal Survival Budget

The personal survival budget is often the document people forget about. Because this is a personal loan, the lender needs to know you can service the repayments alongside your existing personal costs: rent, food, dependents, other debt.

We’d treat it as a stress test of your own financial position, not a formality.

Completing the application properly takes several hours, longer if the business plan needs more than one draft. A rushed application with gaps in the documentation is the most common reason applications stall rather than fail outright.

How the Application Process Works

There is no single application portal. Start Up Loans are processed through a network of accredited delivery partners that handle applications on behalf of the Start Up Loans Company.

You apply online via the Start Up Loans website. Once your initial details are submitted, you are assigned to a delivery partner and given access to a business adviser who guides you through the rest of the process.

We’d treat your assigned business adviser as a working partner in the application, not just an approver. They help finalise your documents, answer questions about your plan, and prepare you for the credit assessment.

The credit check happens before the final lending decision. It is not a standard commercial credit check. The adviser will have context on your situation before it runs, but it will look at your credit history, existing commitments, and the affordability calculation from your personal budget.

If approved, you receive an offer with the loan terms. Funds are transferred to your personal bank account, usually within a few days of accepting. Repayments typically begin one month after drawdown.

The realistic timeframe from completed application to receiving funds is three to eight weeks. That range is wide because it depends heavily on how complete and how viable your documents are when you first submit them.

Applicants with a solid plan and an honest personal budget will move faster than those who need several rounds of revisions.

Where Applications Go Wrong

The British Business Bank does not publish rejection rates, so there is no official breakdown of how many applications fail or why. What is visible from the structure of the scheme and the requirements it imposes is a reasonably clear picture of where problems arise.

A business plan that reads as an idea rather than a plan is the most common structural problem. Vague market claims, optimistic revenue assumptions with no underlying logic, and cost projections that ignore obvious operational expenses will flag in the assessment.

The template helps, but it does not do the thinking for you.

A cash flow forecast that does not survive scrutiny is a related failure. If your forecast shows the business generating revenue from month one with no explanation of how those customers will be acquired, expect questions.

The same applies if your cost base does not include things like insurance, software subscriptions, or basic professional advice.

An unexplained credit issue is a third common sticking point. The scheme does not automatically reject applicants with adverse credit history, but it does expect an explanation.

A CCJ from a previous business, a default on a credit card, or a period of difficulty with a mortgage will need to be accounted for in the application.

When your adviser finds a CCJ you never mentioned, you will be waiting on a reassessment while they contextualise it. That delay is avoidable if you raise adverse credit entries at the document stage.

Finally: applying for the maximum £25,000 without the business plan justifying why that specific amount is needed is a flag. The amount you apply for should follow from your cash flow forecast, not the other way around.

Support You Get With a Start Up Loan

The 12 months of free mentoring is delivered through two post-loan support partners: Newable and UMi. This includes an initial four hours with a dedicated business mentor, 24/7 access to the UMi Sat Nav online resource platform, and webinars covering marketing, financial management, legal compliance, and related topics.

The mentoring tends to be most valuable in the first three months, when you are turning a plan into operations and finding out which assumptions were wrong.

The practical value is in the one-to-one time with a mentor who can look at your actual numbers rather than a generic template.

When the first trading month ends and your forecast is wrong in three places, calling your mentor, who has already read your business plan, is considerably faster than working it out alone.

If you are going through the application process and have not yet used the available support to build your business plan and cash flow forecast, start there.

Using the scheme’s own templates and adviser support is not a shortcut. It is the intended process. We’d prioritise those first four hours on the business plan and cash flow forecast, not orientation topics.

Is a Start Up Loan Right for Your Business?

A Start Up Loan is the right product if you need up to £25,000 of unsecured capital, your business is within five years of trading, and you can make a credible case for viability in writing.

It is not the right product if you need money quickly, need more than £25,000, have a business that has been trading for over five years, or are in a category the scheme excludes.

The alternatives are worth naming directly. Grants do not need to be repaid and are a better outcome if you can access them, but they are more competitive and more narrowly targeted. Most require sector fit, location criteria, or specific business characteristics.

Revenue-based finance or merchant cash advances can move faster if your business is already generating income.

A personal bank loan is typically cheaper only if you already have a strong credit history; for a founder with a thin or patchy credit file, the 7.5% fixed rate will often compare favourably.

We’d point most pre-revenue founders toward this scheme before exploring alternatives. The combination of no security requirement, no arrangement fee, and post-loan mentoring is hard to match at this stage.

The Start Up Loan scheme is not the cheapest money available in all circumstances, but for a founder who is pre-revenue with no assets to offer and needs to demonstrate viability, it is often the only realistic route to structured finance. That is the job it does well.

How to Apply for a Start Up Loan

If you meet the eligibility criteria and want to apply, go to the Start Up Loans website to begin the initial application. You will need your business details, personal details, and a rough sense of how much you need and why.

You will be assigned a delivery partner and a business adviser who will guide the rest of the process.

If your business has been trading for over five years, see the business loans section for options that may apply.

If you are looking for non-repayable funding, see the business grants guide for options that do not require repayment.