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
If you’re raising your first few thousand pounds and can wait about four weeks, this is the cheapest sensible route you’ll find.
You get a fixed 7.5% rate that’s the same for everyone, no arrangement fee, and no security or personal guarantee over your home or kit.
The trade-off is the 25,000-pound cap per founder and a real application: a business plan, a cash-flow forecast, and a personal budget that underwriters actually read.
One thing we keep flagging to readers: it’s a personal loan. Even behind a limited company, you’re the one on the hook if the business can’t pay. The catch is the personal liability.
British Business Bank Start Up Loans
Best For
Choose a Start Up Loan if you’re pre-revenue or trading under five years, want a low fixed rate, and need 25,000 pounds or less per founder to cover your first payroll and supplier bills.
It also suits teams: up to four co-founders can each borrow 25,000 pounds, taking one business to 100,000 pounds without anyone signing a 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 four-week 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 (up to four co-founders) |
| Average loan | £9,295 |
| 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 | 12 months free, plus pre-loan support |
| Regulation | FCA-regulated consumer credit agreement |
| Trustpilot | 4-star “Great” (470 reviews) |
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
There are no fees. No application fee, no arrangement fee, no early repayment charge — the 7.5% interest is the entire cost of the loan.
If you clear the balance early, you simply stop paying interest on what is repaid. That is rare in business lending, where exit and arrangement fees usually bite. That saves you real money.
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 be pre-start or trading for up to 60 months. From April 2026 that limit rose from 36 months, so three-to-five-year-old firms now qualify.
There is a full credit check and underwriting assessment. A clean-ish file helps, but this scheme is far more forgiving of a short history than a high-street bank loan, in the cases we reviewed.
Underwriters weigh your business plan and your personal budget as much as the score. If you can show steady cash flow and clean VAT records, a thin credit file can still get a yes.
Personal Liability and Guarantees
You sign no personal guarantee and pledge no security — not your home, not your equipment. That removes the barrier that stops most founders borrowing.
But read this twice: you’re still 100% personally liable for the debt. The loan is in your name, so if the company can’t pay, the repayments come from your own pocket.
That’s the genuine catch. We would rather you understood it now than discovered it when a failed venture leaves a personal debt on your shoulders.
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 three core documents: a business plan, a 12-month cash-flow forecast, and a personal survival budget showing you can cover the repayments.
Add proof of ID, proof of address, evidence of your right to work, and three months of personal bank statements that match the figures in your survival budget.
The personal budget is where applications stall. When your statements don’t line up with your declared outgoings, expect questions before any decision lands.
Approval and Funding Times
Budget about four weeks from application to funds in a typical case. Straightforward, well-documented applications can be quicker.
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
Miss a payment and your Finance Provider will usually try to agree a revised plan first. They’re not obliged to extend the term, though.
Because the loan is unsecured, no one can seize your stock or your home automatically — that would need a court charging order. The real hit is to your credit file.
A default sits on your personal credit report for six years. When you next apply for a mortgage or card, that mark follows you, long after the business itself is gone. That mark costs you for years.
Start Up Loan Mentoring and Support
Free Business Mentoring
Every funded borrower gets 12 months of free mentoring, which is genuine added value you won’t get from a standard bank loan.
Support starts before approval too: your Delivery Partner works with you on the business plan and the cash-flow forecast that the underwriters will scrutinise.
Quality varies by partner — that’s the honest caveat. A strong mentor is worth real money when you’re wrestling your first payroll run and VAT return; a disengaged one is the common complaint.
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
Because it’s a personal loan, your agreement is a regulated consumer credit agreement under the FCA — so you get standard consumer protections.
The British Business Bank owns the scheme through The Start Up Loans Company. It doesn’t lend to you directly; accredited Delivery Partners and Finance Providers handle that.
In practice you deal with your Delivery Partner day to day, while a regulated Finance Provider holds the loan agreement and administers your repayments.
Making a Complaint
When you submit a complaint, go first to the Delivery Partner or Finance Provider managing your loan. They have a set window to respond.
If they can’t resolve it within eight weeks, or you reject their answer, you can take it free to the Financial Ombudsman Service, which can issue a binding decision.
Keep written records of every call and email from the start. They’re exactly what the Ombudsman will ask for if your complaint gets that far.
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
Alternative lenders like Funding Circle and iwoca fund fast — often within 24 to 48 hours — and lend more, but they cost materially more than 7.5%.
They also want the business trading, typically a year or more with steady turnover, so a genuine pre-start usually can’t access them yet.
If you need speed and already trade, they win. If you’re early and want the cheapest fixed money, the Start Up Loan is the better-value call.
Funding Circle Business Loan
iwoca Business Loan
Tide Funding Options
Final Verdict: Are British Business Bank Start Up Loans Worth It?
For a true startup, yes — this is the option to beat. A fixed 7.5%, no fees, no security and free mentoring is hard to match anywhere else.
It fits one profile cleanly: you’re pre-revenue or trading under five years, you need 25,000 pounds or less per founder, and your cash flow can wait about four weeks for funds.
Two things should give you pause. The cap is real — 25,000 pounds per person rarely funds a capital-heavy launch — and you carry the debt personally, company or not.
If you need six figures fast, or you already have two years of accounts, a bank or Funding Circle will serve you better and lend on your trading record.
But for the founder this scheme is built for, we think it’s the strongest first loan in the UK market. Get your plan and forecast ready, and apply early.
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 £9,295. Verified June 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?
Typically about four weeks from application to funds. Straightforward cases can be quicker; complex ones can take six to eight weeks while your cash flow waits. 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.
Methodology and Disclosure
How We Reviewed Start Up Loans
What we assessed. We reviewed the Start Up Loans scheme on rate, fees, loan limits, eligibility, the application process, repayments and personal risk.
We paid particular attention to the April 2026 changes — the move to 7.5% and the extended 60-month trading limit — because much of the older guidance online is now wrong.
Data sources. We verified every load-bearing figure against startuploans.co.uk and british-business-bank.co.uk in June 2026, and corrected the scheme’s track record to 118,000+ loans and over 1.1 billion pounds.
We also checked Trustpilot (4-star “Great”, 470 reviews) and confirmed the FCA-regulated consumer credit status and the Financial Ombudsman Service escalation route.
Update cadence. We re-verify the rate and eligibility on this page at least quarterly. We’ve no affiliate relationship that affects this assessment. See our editorial policy.