Start Up Loans UK (2026): Rates, Eligibility, Repayments and How to Apply

Start Up Loans at a Glance

Borrowing at 7.5% fixed, with no fees and no security, is cheaper than almost anything else available to a business that is under five years old or has not started trading. What you give up is time, and the fact that the risk sits with you rather than with the company. The assessment moves at whatever speed you can produce the documents.

That £25,000 headline is a ceiling rather than an expectation. The scheme’s own stated average loan is £10,264, and the assessment is built around what your forecast can service rather than what the cap allows, so it is worth planning around a number closer to ten thousand than twenty-five. A business that needs much more than £25,000 to get moving should not be built around this loan at all.

What Changed on 6 April 2026

If you have read anything about Start Up Loans written before this spring, two of its headline numbers are now wrong. The rate went up and the door opened wider on the same day, and a great deal of otherwise sensible content still quotes the old pair.

On the largest loan over the longest term, the increase costs £17.63 a month. Over five years that is £1,057.72 more than the same £25,000 drawn in March, on our calculation. It is a genuine increase and the number is worth knowing, but the rate was set at 6% when the scheme launched in 2012 and had not moved since, so the change reads as overdue repricing rather than a shift in what the product is for.

The eligibility change is the one more likely to affect you. A business trading for four years was outside the scheme in March and is inside it now. If you were turned away on trading history rather than on your credit file or your plan, you can apply again, and the two-year window that opened up on 6 April is the single biggest expansion the scheme has made since it started.

What a Start Up Loan Is, and Who Actually Lends It

It is a personal loan. That one fact governs almost everything else on this page: how you are assessed, where the money lands, what happens if the business closes, and whose credit file carries the record. A limited company can benefit from a Start Up Loan, but a limited company cannot borrow one.

The practical proof of that arrives with the money. Start Up Loans will not pay into a business bank account even if you have one, and asks for your personal account details instead, so you receive the funds yourself and move them into the business. It looks like an administrative quirk and it is not. It is the clearest available statement of who the lender holds responsible for the repayments.

Three organisations sit behind the agreement. The Start-Up Loans Company runs the programme and sets the terms; it is a member of the British Business Bank group, and British Business Bank plc is a development bank wholly owned by the government. A Business Support Partner is the organisation you actually deal with: it builds the documents with you, assesses the application and makes the lending decision. A Finance Provider then issues the loan agreement and collects the monthly payments. The common shorthand “a British Business Bank loan” is worth avoiding, because it obscures who you actually contract with.

Two further details are easy to miss and occasionally decisive. Because the programme is publicly funded, your loan counts as a subsidy: outside the Northern Ireland Protocol it falls under Minimal Financial Assistance in the Subsidy Control Act 2022, which caps you at £315,000 of such support across a rolling three fiscal years, and if you have taken other public funding you will be asked to declare it. Separately, a Sharia-compliant version of the product exists, administered through a delivery partner rather than through the standard route.

Who Is Eligible for a Start Up Loan

Trading age decides more applications than anything else, and since April the limit is 60 months rather than 36. The rest are thresholds a business either meets or does not, apart from the credit check and the affordability assessment, which are judgements made on the individual file.

• You are 18 or over and currently resident in the UK.
• You have the right to work in the UK.
• Your business is based in the UK and is either not yet trading or has been trading for up to 60 months.
• Your business type and your intended use of the money are both eligible under the scheme.
• You are unable to secure finance from other sources — a self-declaration is accepted.
• You pass the personal credit check and can afford the repayments.
• You can show the business is viable through a business plan and a cash-flow forecast.

The “unable to secure finance from other sources” criterion reads like a hurdle and is not one. Nobody asks for rejection letters from other lenders; the scheme accepts your own declaration. It is there to keep the programme pointed at businesses the mainstream market will not serve, not to make you prove you have been refused.

The awkward cases are more often eligible than people assume, and the ones that rule you out are narrower and more specific than a general worry about bad credit.

Some business types are excluded outright: weapons, chemical manufacture, pornography, drugs, illegal activity, banking and money transfer along with other FCA-regulated activities, unlicensed private investigators, gambling and betting, property investment, and acting as an agent for a third party where the commission is the substance of the business. Charities are excluded, though community interest companies, not-for-profits and social enterprises with a sole community focus are looked at case by case. The scheme reserves the right to add to that list.

What you spend it on is fenced too. A Start Up Loan cannot be used to repay existing debt, to pay for training, qualifications or education programmes, or to fund an investment opportunity that is not part of an ongoing sustainable business. Equipment, stock, premises and marketing are all fine, provided your business plan and forecast explain the spending and connect it to the business getting off the ground.

How Much You Can Borrow and What It Costs

Each eligible person can have between £500 and £25,000 outstanding at any one time, and a maximum of £100,000 can be lent to any one business across its lifetime. The lifetime part matters and is regularly misread as an annual allowance. Two co-founders who each take £20,000 have used £40,000 of that business’s £100,000 permanently, not for the year.

At 7.5% fixed, £10,000 over five years costs £200.38 a month and £2,022.77 in interest. We calculated every row below independently and then checked it against the scheme’s own repayment calculator; both of the points we tested matched to the penny.

Stretching £25,000 from three years to five takes £276.71 off the monthly payment and adds £2,061.32 to the total. Neither term is right in the abstract. If the money buys something that starts earning quickly, the shorter term is cheaper and the cash flow usually carries it; if you are funding a slow build, the extra room is worth more than the £2,061. Because there is no early repayment charge, taking five years and overpaying in the good months is a defensible middle course, and it is the one we would take on a first loan where the revenue is still a forecast.

One rule catches people later on. The £25,000 is a cap on what you have outstanding, not on what any single loan can be. Borrow £15,000, repay £5,000, and you have room to borrow another £15,000 through a second loan, subject to the rest of the criteria below.

How to Apply, and How Long It Takes

You apply to Start Up Loans or one of its Business Support Partners, not to a bank. A partner makes contact within two working days, and from that point the pace is set almost entirely by how quickly the paperwork comes together.

Three documents carry the assessment, and the scheme is explicit about what each one is for. Your business plan and your 12-month cash-flow forecast are read for business viability — whether there is enough demand for what you are selling and whether the plan is achievable. Your personal survival budget is read for personal affordability — whether you can cover your own rent, bills and living costs while the business finds its feet. Your credit file is the third leg. Free templates exist for all three, and your adviser will work through them with you, so you are not starting from a blank page.

You will also be asked for bank statements and for identity, address and right-to-work documents. Those are verification rather than assessment: they confirm who you are; they do not decide the application.

The credit check comes early, before you have sunk weeks into the documents, which is a sensible piece of design. It is valid for three months. If the application is still in progress after that, a fresh check is run, so there is a practical deadline on the drafting stage even though nobody presents it as one. We would not begin the documents in earnest until the check is behind you.

On timing, Start Up Loans declines to publish an average and says it cannot give one. Its own guidance is that a well-prepared applicant can be through in two to three weeks, while someone who needs help building the documents can take two to three months or longer. We would treat the four-week figure that circulates on comparison sites as an invention. The honest answer is that the gap between two weeks and three months is usually a cash-flow forecast that does not exist yet. Enquiries are answered within five working days.

Once the decision is made, your Finance Provider posts the loan agreement for signature and releases the funds after you return it. You then have a 14-day cooling-off period: return the money inside it and you owe no interest at all. After that the full loan and interest are due under the agreement.

If you are declined, you must wait at least six months before applying again, and you go back to the same Business Support Partner, who already knows the file. You will need to show either that your circumstances have changed or that you have fixed what the decline letter raised. The scheme attributes declines to affordability or viability, and it does not publish a breakdown of which does more of the work, so treat any guide that names one document as the decisive one with suspicion.

Credit Checks: What They Look At and What They Cost You

The check is a personal hard search, and it leaves a visible mark. It appears on your credit report as an application for finance, which can move your score, and it is the personal file that is examined rather than any business credit record. If you are also within a few months of a mortgage application, that search will be sitting there when the mortgage lender looks.

A successful loan stays visible for considerably longer. The scheme states that the loan, along with every repayment you make, appears on your personal credit report for at least six years. Kept up, that is a six-year record of you servicing a fixed commitment, which is a useful thing to own if you have never borrowed at this scale before. Missed, it works the same way in reverse.

Certain formal impairments rule you out and are worth naming plainly, because “bad credit” as a general worry does not. Start Up Loans cannot lend to you if you are bankrupt or filing for bankruptcy, on a Debt Relief Order, subject to an outstanding IVA or Trust Deed, or on a debt management programme or Debt Arrangement Scheme. Outside that list a poor history is a factor in the assessment rather than a bar, and the scheme publishes no minimum score. Any guide quoting one has made it up.

Personal Liability, Missed Payments and Business Failure

No asset is pledged as security and no personal guarantee is signed. Neither of those things puts your home out of reach if the loan goes unpaid, because you owe the money personally and the ordinary consequences of unpaid personal debt follow from there. Unsecured is a description of the paperwork, not a description of the risk.

The scheme is unusually direct about this, and its wording is worth reading before you sign anything. Asked whether you still have to repay if you pull out of the business or it ceases trading, Start Up Loans answers that you remain personally liable for the full loan amount and interest under the agreement you signed, regardless of the status of the business or your position within it. Closing the company does not close the loan.

This is also where a Start Up Loan differs from the personal guarantee most founders have heard about. A guarantee is a promise to cover a company’s debt if the company cannot, so it is only called on after the company has failed to pay. A Start Up Loan skips that structure entirely: there is no company debt to guarantee, because the borrowing is yours from the first month. In practice that leaves you more exposed than a guaranteed company loan would, not less, and the low rate is doing a lot of work to compensate.

If a payment is going to be missed, the escalation is the standard one for regulated consumer finance. The Finance Provider makes contact to find out why, follows up in writing, and works towards an arrangement. Where it cannot reach the borrower after repeated attempts, it can notify credit reference agencies, pass the file to an approved debt collection agency, or apply for a County Court Judgment. A CCJ then affects your ability to obtain credit, goods, services and even some kinds of employment, which is wider than most people picture when they imagine a business loan going wrong.

Speak to the Finance Provider before the payment is missed rather than after; it is the single most useful thing you can do, and it is the scheme’s own advice. Your mentor cannot help here, because mentors are barred from giving debt advice. Free, impartial help comes from National Debtline and Business Debtline, both run by the Money Advice Trust, and from Citizens Advice and StepChange. Start Up Loans explicitly does not endorse fee-charging debt management companies, and neither do we.

Second Loans and Tranched Loans

A second loan is possible for the same business, and the criteria are specific. You must have drawn down the first loan at least six months ago, be trading for at least three months and no more than 60, and have made every repayment on schedule for the three months before you apply. If you have been on a capital repayment holiday, three full repayments with capital repaid must have been made on schedule beforehand.

The ceiling is the £25,000 outstanding balance rather than a fresh £25,000. Someone who borrowed £15,000 and has repaid £5,000 can apply for up to £15,000, and will have to demonstrate affordability across both sets of repayments running at once. A second loan is a new application in every other respect too, which includes a new credit check, a fresh set of documents and, importantly, the interest rate in force on the day you apply. A 6% first loan does not carry its rate across.

One restriction is easy to trip over: an individual can only have a Start Up Loan for one business. If you run more than one venture, the scheme will finance a single one of them, and a second loan means more money for that same business rather than a route into the next.

Tranching is the quieter option and is under-used. Rather than drawing the full amount at once, you agree the whole loan and take part of it now, with the rest available later. You pay no interest on money you have not drawn, and if you decide you never need the balance you simply do not take it. For a business where the second half of the spending depends on how the first half goes, that is a cheaper way to hold the same certainty.

What the Free Mentoring Is Actually Worth

Nearly every description of this scheme, including its own homepage, says “12 months of free mentoring”. The entitlement is four hours of one-to-one mentoring spread across those twelve months. Both statements are true. Only one of them tells you what you are getting, and the gap between the two is where a lot of the scheme’s reputation for generous support quietly lives.

Set the label aside and the package is still a reasonable one. Alongside the four hours you get the adviser support that runs through the application itself, free templates for the business plan, cash-flow forecast and personal survival budget, and access to an online support platform with guides and live or on-demand webinars covering planning, marketing, finance and the legal basics. Mentoring is optional, and how you use the four hours is agreed between you and your mentor rather than dictated by a schedule. Sessions happen by phone, video or email as often as in person; face-to-face cannot be guaranteed.

There are limits worth knowing before you rely on it. A mentor gives general guidance and is explicitly barred from debt counselling, so the support stops precisely where financial difficulty begins. And whatever the mentoring relationship, responsibility for the repayments stays with you.

Our view is that four hours of an experienced outsider’s attention, at the point where you have never done any of this before, is genuinely worth having. It is not worth choosing a more expensive loan for, and it is not the consultancy retainer that “12 months of mentoring” implies. Take it, use it early while the plan is still changeable, and price it into the decision at roughly what it is rather than at what it sounds like.

Start Up Loans Compared With Other Startup Funding

For a business under five years old that needs £25,000 or less per founder, a Start Up Loan is usually the cheapest money available. The harder question is what to do when one of those two conditions fails.

Note what the alternative-lender row does not say. A business turned down for a Start Up Loan on trading age is often too new for a commercial lender as well, because a one-year minimum is common — we took that from Funding Circle’s own current start-up finance page rather than repeating the two-year minimum that circulates in older comparisons. The choice between a Start Up Loan and a commercial loan is mostly a real choice for businesses that clear both, and for anyone in their first year it is frequently not a choice at all.

If your question is which lender rather than which scheme, that comparison sits on our guide to the best startup business loans. For the wider borrowing picture, see types of business loans and our business loan comparison. Other publicly backed routes, including the Growth Guarantee Scheme and grants, are set out in government-backed business finance explained, and the institution behind this scheme has its own British Business Bank review.

What the Evidence Says About the Scheme

Start Up Loans has been evaluated independently, which is more than most start-up finance can claim. The British Business Bank commissioned SQW to refresh the evidence and published the results on 12 December 2024, looking at loans drawn down in two cohorts, one in 2018/19 and one in 2021/22.

• By year five, businesses started by loan recipients had survived at higher rates than comparison groups, by between four and 26 percentage points across the cohorts assessed.
• On average, one additional employee job was created for each loan, beyond the recipient’s own employment.
• Recipients’ businesses had grown faster since incorporation than the comparator group, by around 34% cumulatively in assets and around 15% in employment.
• Just over two-thirds of the finance provided — a finance additionality ratio of 68% — would not have been provided by mainstream lenders.

Read those carefully. They are evaluation findings about particular cohorts, not a promise about any one business, and a four-to-26-point range is wide enough that the honest summary is “better, by an amount that varies a great deal”. The additionality figure is the one we find most useful, because it addresses the question that actually matters for public money: whether the scheme is lending to people the market would otherwise have turned away. Two-thirds says it largely is.

The full report is published by the British Business Bank.

Verdict: Is a Start Up Loan Worth It?

For a founder who needs £25,000 or less, whose business is under five years old, and who can afford the repayments out of household income if the first months are slow, this is the best-priced borrowing on the table and it is not close. We have not found a commercial product that matches 7.5% fixed with no fees, no security and no early repayment charge at this stage of a business’s life. Take it, take the mentoring, and plan around the £10,264 average rather than the £25,000 headline.

It is the wrong product if you need more than £25,000 personally, if you need the money in days rather than weeks, or if the repayment only works when the business performs to forecast. That last one is the real test and the one people skate over. The debt is personal from the first month and stays personal after the business closes, so the question is not whether the business can afford £500.95 a month but whether you can.

And if you were turned down before 6 April 2026 on trading history alone, apply again. The 60-month rule brought a lot of four- and five-year-old businesses back inside a scheme that had written them off.

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