Start Up Loans: Rates, Eligibility and How to Apply

What a Start Up Loan Actually Is

You borrow between £500 and £25,000 as a Start Up Loan, at a fixed rate of 7.5% a year, repaid over one to five years. It’s a personal loan to you, backed by the government, not a loan to your company.

Your loan is personal, not your company’s, which matters more than the name suggests. We rate the fixed rate as the real draw: your repayment never moves, whatever the base rate does, and there’s no early repayment charge if you clear it early.

Your home stays out of it, too: the loan is unsecured, with no personal guarantee.

You’ll deal with the Start Up Loans Company, part of the British Business Bank. Picture yourself at the kitchen table on a Sunday, seeing how that fixed repayment sits against your monthly cash flow, and knowing exactly what leaves your account.

Who Qualifies for a Start Up Loan

You qualify if you’re 18 or over, live in the UK, and your business has been trading for less than 60 months, or hasn’t started yet. That five-year window is wider than most people assume, and we rate it as the scheme’s most misread rule.

Your personal credit file still matters, though. The assessor runs a credit check and tests whether your forecast can actually service the repayment, so a weak file or a thin plan can still get you declined.

You can’t lean on the government backing here; it won’t pass that check for you.

You and each fellow director can apply for up to £25,000 each, so a business with several directors can raise up to £100,000 in total. Picture two co-founders each submitting their own application on the same afternoon, stacking two £20,000 loans into one launch budget.

What You Need Before You Apply

You’ll need three documents: a business plan, a cash-flow forecast, and a personal survival budget. The Start Up Loans Company gives you free templates for all three, so you’re not starting from a blank page.

Your personal survival budget is the one you’ll be tempted to skip, and we rate it as the document that sinks applications. It proves you can cover your own rent and bills while the business finds its feet, not just the company’s costs.

You’ll look unprepared without it.

Your cash-flow forecast carries the weight for the lending decision. Picture your accountant on a Thursday evening, mapping twelve months of income against the loan repayment to prove the number holds up.

How the Application Works and Where It Goes Wrong

You apply directly to the Start Up Loans Company or one of its delivery partners, not to a high-street bank. A business adviser is assigned to you, reviews your documents, and sharpens them with you before the loan reaches the credit decision.

You get real value from that adviser stage, and we rate it as no formality. They’ll flag your shaky cash-flow forecast before it reaches the assessor, which is where most applications quietly fail.

You’ll usually be rejected for one reason: your cash flow can’t service the monthly repayment.

You can still rescue a borderline case here. Picture your adviser emailing you on a Monday, asking you to rework a single optimistic sales month before your file goes forward.

Is a Start Up Loan Right for You?

You get the best of it when you need a modest sum, value a fixed rate, and would use the free mentoring. We rate that 12 months of support as worth real money you’d otherwise pay a consultant for.

Your business might outgrow it, though. If you need more than £25,000 quickly, or you’re past the five-year mark, a commercial lender like iwoca or Funding Circle may serve you better despite the higher rate.

You won’t always want the cheapest money on the table.

You weigh the mentoring against the cap in the end. Picture yourself on a Friday, choosing between a slower £20,000 Start Up Loan with an adviser and a faster £60,000 commercial facility that leaves your cash flow on its own.

Start Up Loan FAQs