If your business is too young for a high-street bank loan and you have no assets to put up, the government Start Up Loan is usually where you should start.
It’s run by the British Business Bank and pays out an unsecured personal loan you spend on the business: a fixed 7.5% from April 2026, no fees, plus free mentoring.
We’ve checked every rate, limit and rule below against the scheme’s own pages, because the headline figures changed in April 2026 and a lot of older guidance is now wrong.
Start Up Loans at a Glance
Our Verdict
For a founder raising the first few thousand pounds, this is a cheap and sensible place to start, provided you need no more than 25,000 pounds and can wait weeks rather than days. The fixed 7.5% rate is the same for every approved applicant, with no arrangement fee, security or personal guarantee.
The application is more demanding than the headline terms suggest. You need a business plan, cash-flow forecast and personal budget, and the underwriter reads all three. More importantly, this is a personal loan: even if you trade through a limited company, you remain liable if the business cannot make the repayments.
British Business Bank Start Up Loans
Best For
A Start Up Loan suits a business that has not started selling yet, or one trading for under five years, that needs 25,000 pounds or less per founder for costs such as initial payroll and supplier bills. It can also work for a founding team: up to four co-founders may each borrow 25,000 pounds, giving one business access to 100,000 pounds without anyone signing a personal guarantee.
Not Ideal For
Skip it if you need more than 25,000 pounds each, want the cash this week, or are in an active bankruptcy, DRO or IVA: those rule you out outright.
If you’re already trading profitably with two years of accounts, a bank or Funding Circle will lend more, and your established cash flow earns you a better deal.
And if you need the cash inside a week, the adviser-led assessment alone rules it out. A same-day alternative lender is the better fit there.
Key Facts
| Feature | Detail |
|---|---|
| Interest rate | 7.5% fixed p.a. (from 6 April 2026; was 6%) |
| Loan per founder | £500 – £25,000 |
| Maximum per business | £100,000 across all owners, over the lifetime of the business |
| Average loan | £10,264 (checked 20 August 2026) |
| Term | 1 to 5 years (12–60 months) |
| Fees | No set-up, arrangement or early repayment fees |
| Security / guarantee | None required (but personally liable) |
| Mentoring | Four hours of one-to-one mentoring over the first 12 months, plus pre-loan support |
| Regulation | FCA-regulated consumer credit agreement |
What Are British Business Bank Start Up Loans?
How Start Up Loans Work
A Start Up Loan is a personal loan you take out for business use: not a grant, and not a loan to your company.
The money lands in your personal account and you repay it in fixed monthly instalments over one to five years at 7.5%. Since 2012 the scheme has paid out more than 1.1 billion pounds across over 118,000 loans.
Because it’s personal, the limited-liability shield of a company doesn’t apply. If your supplier invoices go unpaid and the business folds, you still owe the balance.
Main Loan Options
There is one core product: a fixed-rate unsecured loan of 500 to 25,000 pounds per person. There are no premium tiers or variable-rate versions to compare.
For a team, each eligible co-founder applies separately for up to 25,000 pounds. Four founders can stack to 100,000 pounds for one business, each on their own agreement.
You can also apply for a second loan later once the first is on track, though any new borrowing from 6 April 2026 is priced at the current 7.5% rate.
Start Up Loan Rates and Fees
Interest Rate and Representative APR
The rate is a fixed 7.5% per year, charged on the reducing balance, and it’s the same whatever your credit profile or sector.
That figure rose from 6% on 6 April 2026: the first change since the scheme launched in 2012. If you borrowed before that date, you keep your original 6% rate.
There is no risk-based pricing here. A first-time founder and a seasoned one pay the identical 7.5%, which we rate as the scheme’s biggest pricing advantage for newer businesses.
Fees and Charges
The 7.5% interest is the entire cost of the loan because there is no application fee, arrangement fee or early repayment charge. If you repay the balance early, interest stops accruing on the amount cleared. That flexibility matters when many business loans add arrangement or exit fees to the advertised borrowing cost.
What Affects Your Rate
Nothing affects your rate, and that’s the point worth grasping. The 7.5% is fixed for every borrower, so a thin credit file doesn’t push your cost up.
Your credit history and plan affect approval and the amount offered, not the price. That removes the usual new-business pricing gap, and we rate it highly for a thin file.
Start Up Loan Eligibility
Who Can Apply for a Start Up Loan
You must be 18 or over, live in the UK, and have the right to work here for the loan term. The business must be UK-based too.
You also need to show you can’t fund the business fully from your own resources and couldn’t readily get the same finance elsewhere: it’s aimed at the funding gap.
A few sectors are excluded outright, including weapons, adult content and speculative gambling. Most ordinary retail, trade and service businesses qualify on this front.
Trading History, Business Stage and Credit Checks
Your business must either be preparing to start or have traded for no more than 60 months. That limit increased from 36 months in April 2026, bringing businesses in their fourth and fifth years within the scheme for the first time.
Approval still involves a full credit check and underwriting assessment. A clean credit file helps, but a short history does not automatically rule you out as it may with a high-street bank loan. Underwriters also examine your business plan and personal budget, so evidence of steady cash flow and clean VAT records can support an application where the credit file is thin.
Personal Liability and Guarantees
You don’t sign a personal guarantee or pledge security such as your home or equipment. That makes the loan easier to access when a new business has no assets to offer, but it does not protect you from the debt itself.
You remain 100% personally liable because the loan is in your name. If the company fails and cannot make the repayments, the outstanding balance must come from your own pocket. That matters more than the reassuring phrase “no personal guarantee” suggests: there is no separate guarantee to enforce, but the personal debt remains yours.
Start Up Loan Application Process
How to Apply for a Start Up Loan
You start with an online eligibility check, then get matched to an accredited Delivery Partner such as GC Business Finance or Virgin StartUp.
The Delivery Partner walks you through the paperwork, reviews your plan, and submits the application. They’re also the people who mentor you afterwards, so the relationship matters.
Documents and Business Plan Requirements
You need a business plan, a 12-month cash-flow forecast and a personal survival budget showing that you can afford the repayments. You must also provide proof of identity and address, evidence of your right to work and three months of personal bank statements.
The personal budget needs the most care, because its figures must agree with those bank statements and still leave room for the monthly repayment. A polished business plan will not rescue an application if your own budget shows that the loan is unaffordable.
Approval and Funding Times
Start Up Loans does not publish an average and says it cannot give one. Its own guidance is two to three weeks for a well-prepared applicant, and two to three months or longer where the documents still need work.
Complex cases (patchy paperwork, a borderline plan, fuller underwriting) can stretch to six or eight weeks. If you have a fixed launch date, start the process early.
The single biggest delay is you. When you file the forecast and statements on day one, the assessment moves; when they trickle in, the clock keeps resetting.
Start Up Loan Repayments, Flexibility and Risk
Repayment Terms and Flexibility
You repay in fixed monthly instalments over one to five years, so your cash flow carries a known, level cost every month with no surprises.
In year one you may be able to negotiate a capital repayment holiday, easing early pressure, but interest still accrues, so the total cost edges up if you use it.
There is no early repayment charge. If a good quarter lands and you want to clear the balance, you can, and you stop paying interest on what you settle.
Missed Payments and Default Risk
If you miss a payment, the lender named in your loan agreement (the Finance Provider) does not have to extend the term. The loan is unsecured, so your stock or home cannot be seized automatically; a creditor would need a court charging order. The immediate risk is damage to your personal credit file rather than the automatic loss of a business asset.
A default remains on your personal credit report for six years. That means a failed business loan can still count against you when you later apply for a mortgage or card, even after the business itself has closed.
Start Up Loan Mentoring and Support
Free Business Mentoring
Every funded borrower is entitled to four hours of one-to-one mentoring over the first 12 months of the loan term. Support starts before approval, with the Delivery Partner helping you prepare the business plan and cash-flow forecast, so the scheme offers more practical assistance than a standard bank loan.
How much those four hours are worth depends on the Delivery Partner and the mentor you are matched with. An engaged mentor can help you work through early decisions such as your first payroll and VAT registration. One who does not engage adds much less, and four hours over a year leaves little time to make up for a poor match.
Digital Tools and Resources
You also get access to free online resources, including Open University courses in enterprise, finance and sustainability, plus partner discounts on business tools.
None of this replaces a good mentor, but if you’re teaching yourself bookkeeping and VAT from scratch, the free courses are a sensible, no-cost place to start.
Treat them as a supplement, not the main event. The mentor relationship is where the real value sits; the courses just fill the gaps around it.
Start Up Loan Regulation and Oversight
Regulatory Status and Scheme Administration
The money is lent by the regulated Finance Provider named in your agreement, not directly by British Business Bank plc. Because this is a personal loan for business use, the agreement is regulated consumer credit under the Financial Conduct Authority, which gives you access to the formal complaints process and the Financial Ombudsman Service.
British Business Bank plc, registered under company number 08616013, owns the scheme through The Start-Up Loans Company, registered under company number 08117656. Accredited Delivery Partners assess applications and provide support, while the Finance Provider issues the loan and administers your repayments.
For loans issued through GC Business Finance, the lender is The Enterprise Fund Limited, which trades as GC Business Finance. The firm is registered in England and Wales under company number 04460763, is authorised and regulated by the Financial Conduct Authority under FRN 727252, and is a subsidiary of The Growth Company Limited.
Making a Complaint
Complain first to the Delivery Partner or Finance Provider managing your loan, because which firm is responsible depends on who handled your application and who issued the agreement.
If the firm has not resolved the complaint within eight weeks, or you reject its final response, you can refer the case free of charge to the Financial Ombudsman Service. The Ombudsman can investigate the complaint and issue a binding decision.
Keep the agreement, statements and written records of calls and emails from the start, so the firm and the Ombudsman can trace what happened.
Start Up Loans vs Alternatives
Start Up Loans vs High Street Bank Business Loans
A high-street bank will lend far more (often up to 100,000 pounds on one application), but it wants 12 to 24 months of trading and usually an existing business account. The catch is the trading history.
Banks also tend to want security or a personal guarantee, and they price on risk. For a true startup with no history, that often means a decline rather than a deal.
Use a bank once you’re established and need scale. Use the Start Up Loan when you’re early, unsecured and want a fixed rate that ignores your thin file.
Start Up Loans vs Government Grant Schemes
A grant beats any loan on paper: no repayment and no interest. The problem is getting one: grants are hyper-competitive and tied to specific sectors and regions.
Most also expect match funding from your own pocket, which defeats the point if cash is the very thing you’re short of. They rarely cover general working capital.
Chase grants if you fit a targeted scheme, but don’t bank on one. The Start Up Loan is the reliable fallback when the grant doesn’t come through.
Start Up Loans vs Alternative Startup Funding
Funding Circle and iwoca can often pay out within 24 to 48 hours and lend far more than 25,000 pounds, but on price they sit at opposite ends. Funding Circle advertises rates from 6.9% a year, below the Start Up Loan’s 7.5%, then adds a one-off completion fee and judges what you can afford on your trading history, so it is built for businesses already selling. iwoca accepts applications from businesses of any age, but its representative rate is 49% APR against the Start Up Loan’s fixed 7.5%.
If you already trade and need money quickly, an alternative lender may justify its cost. If you are still preparing to launch and can wait for the assessment, the Start Up Loan gives you a low fixed rate that no lender here will match without a trading record.
Funding Circle Business Loan
iwoca Business Loan
Tide Funding Options
Final Verdict: Are British Business Bank Start Up Loans Worth It?
For a genuine startup, this is the loan to look at first. The fixed 7.5% rate, absence of fees and security, and four hours of one-to-one mentoring over the first 12 months make it difficult to match for a founder without an established trading record.
The fit is narrow but clear: you have not started selling yet or have traded for under five years, need no more than 25,000 pounds per founder and can wait weeks rather than days. The cap may be too low for a capital-heavy launch, and the debt remains personal even if you operate through a company.
A bank or Funding Circle is likely to suit you better if you need six figures quickly or already have two years of accounts. For the early-stage founder this scheme was designed for, however, we rate it the best first loan of the lenders we compared, because none of the others offers a fixed rate this low without a trading record. Prepare the plan and forecast before applying so incomplete paperwork does not prolong the assessment.
Frequently Asked Questions
How much can I borrow through a Start Up Loan?
Each founder can borrow £500 to £25,000. Up to four co-founders in one business can each apply, taking the business total to £100,000. The average loan paid out is £10,264, checked on 20 August 2026.
What is the current interest rate for Start Up Loans?
A fixed 7.5% per year, the same for every applicant, charged on the reducing balance. The rate rose from 6% on 6 April 2026. Loans taken before that date keep their original 6% rate.
Do I need a business plan to apply?
Yes. You need a business plan, a 12-month cash-flow forecast and a personal survival budget, plus ID, proof of address, right-to-work evidence and three months of personal bank statements. Your Delivery Partner helps with all of them.
How long does a Start Up Loan take to be approved?
Start Up Loans does not publish an average and says it cannot give one. Its own guidance is two to three weeks for a well-prepared applicant, and two to three months or longer where the documents still need work. The main delay is usually how fast you supply complete paperwork.
Can I get a Start Up Loan if my business is already trading?
Yes, provided it has been trading for no more than 60 months (five years). That limit rose from 36 months in April 2026. You can’t apply during an active bankruptcy, Debt Relief Order or Individual Voluntary Arrangement.
How We Reviewed Start Up Loans
What we assessed. We reviewed the Start Up Loans scheme on its rate, fees, loan limits, eligibility, application process, repayment terms and personal risk. We gave particular attention to the April 2026 changes, including the move to 7.5% and the extension of the trading limit to 60 months, because older guidance may still show the previous terms.
Data sources. We checked the main figures against startuploans.co.uk and british-business-bank.co.uk in June 2026, which corrected the scheme’s track record to more than 118,000 loans and over 1.1 billion pounds. On 24 September 2026 we rechecked the rate, fees, loan limit and mentoring allowance on startuploans.co.uk, Funding Circle’s and iwoca’s published rates, and which regulated firm lends the money.
Update cadence. We recheck the rate and eligibility regularly and date each check on this page. We have no affiliate relationship that affects this assessment; our approach is set out in our editorial policy.