What is the Start Up Loan?
The Start Up Loan is a UK government-backed personal loan offered to new business owners who cannot access conventional finance. The scheme is delivered by the British Business Bank and administered through delivery partners (accredited lenders).
Key facts:
- Loan amount: £500–£25,000 per person (up to £100,000 per business across multiple directors)
- Interest rate: 6% fixed (annual)
- Repayment term: 1–5 years
- Security: none required — no personal guarantee, no property
- Cost to apply: free
The scheme has provided over £1 billion in loans to more than 100,000 businesses since its launch in 2012.
Who is eligible?
You must:
- Be 18 or over
- Be a UK resident
- Be starting a business or have been trading for fewer than 36 months (3 years)
- Have the right to work in the UK
- Not already have a Start Up Loan outstanding
The loan is available to both pre-revenue businesses (including those yet to launch) and businesses under 3 years old that have not accessed the scheme before.
✗ Not eligible:
- Businesses that have been trading for more than 3 years
- Businesses primarily involved in property investment, gambling, or financial speculation
- Individuals who have previously received a Start Up Loan for the same business
What can the loan be used for?
The Start Up Loan is versatile. Permitted uses include:
- Stock and materials
- Equipment and machinery
- Marketing and advertising
- Staff costs (wages, contractor fees)
- IT equipment, software, websites
- Rent deposits
- Working capital
It cannot be used to repay existing debts or for personal use.
How to apply
- Check eligibility — use the British Business Bank’s online checker
- Choose a delivery partner — approved lenders include iwoca, Funding Circle, Virgin StartUp, and others listed on startuploans.co.uk
- Prepare a business plan and cash flow forecast — required as part of the application; free business plan templates are available via delivery partners
- Submit your application — reviewed by the delivery partner; typical decision time is 3–6 weeks
- Receive funding and mentoring — successful applicants receive 12 months of free mentoring from a business mentor
Interest and repayment
At 6% fixed over a maximum of 5 years, the Start Up Loan is significantly cheaper than almost any commercial alternative for early-stage businesses.
Example:
- Loan: £15,000
- Term: 3 years
- Monthly repayment: ~£456
- Total interest paid: ~£1,400
When the Start Up Loan is not enough
The Start Up Loan maximum is £25,000 per person. For businesses needing more:
- Multiple directors can each apply for up to £25,000 (total cap £100,000)
- Alternative lenders on Fundably’s panel may consider businesses from 6 months trading (some from day one for certain product types)
- Franchise-specific lending through high street banks may be available alongside the Start Up Loan for franchisees
After the 3-year trading threshold, businesses can move to commercial lending. Compare business loans on Fundably here.