1. Government-Backed Start Up Loans
The UK’s Start Up Loans Scheme offers:
- Up to £25,000 per individual
- Fixed 6% interest rate
- Repayment terms from 1 to 5 years
- Free mentoring for 12 months
Ideal for businesses trading under 36 months. No collateral required, but a solid business plan is essential.
2. Bank Start Up Loans
Major banks offer business start up loans with competitive rates for new businesses. Popular providers include:
- Barclays Start-Up Loans
- Lloyds Business Loans
- NatWest Startup Finance
Requirements often include a business plan, projected income, and good personal credit history.
3. Online Lenders and FinTech Platforms
Digital lenders are faster and more flexible, often funding within 24–72 hours. Options include:
- Iwoca
- Funding Circle
- Fleximize
- Tide Capital
These may offer unsecured loans but can have higher interest rates than banks.
4. Asset-Based Start Up Loans
If you have valuable business or personal assets (vehicles, equipment, or property), you may qualify for secured startup loans.
Benefits include:
- Larger loan amounts
- Lower interest rates
- Longer repayment terms
However, defaulting could put your assets at risk.
5. Peer-to-Peer (P2P) Lending Platforms
Platforms like Funding Circle or Zopa connect businesses directly with investors. These loans are:
- Unsecured
- Competitive in rates
- Based on business viability and financials
Good for startups with decent forecasts but limited credit history.
6. Business Credit Cards and Overdrafts
While not traditional loans, these tools offer flexibility and instant access to capital. Best for:
- Covering small startup costs
- Emergency expenses
- Bridging cash flow gaps
Be cautious of interest rates and repayment timelines.
7. Startup Loan Alternatives: Grants and Equity
If loans aren’t suitable, consider:
- UK business grants – non-repayable but competitive
- Angel investment – in exchange for equity
- Crowdfunding – funding through public support or pre-sales
These can reduce or eliminate debt risk for your business.
Frequently Asked Questions
Can I get a startup loan with no business history?
Yes. Government and some online lenders support pre-revenue businesses with a viable business plan.
Is a personal guarantee required?
Often yes, especially for unsecured loans. You’ll be personally liable if the business can’t repay.
How long does it take to get a startup loan?
Government loans take 2–4 weeks. Online lenders may approve and fund within 24–72 hours.
Can I use the loan for any business expense?
Yes, for most legitimate business costs like stock, marketing, or equipment. You can’t use it for personal use or repaying debts.
Is a startup loan tax deductible?
The loan itself isn’t, but interest paid can be claimed as a business expense.
Can I get multiple startup loans?
Yes. You can combine personal, partner, or multiple lender sources—but be careful not to overextend.
Conclusion
Getting the right loans business start up helps UK entrepreneurs turn ideas into reality. Whether you choose government schemes, bank funding, or digital lenders, having a solid plan, realistic forecasts, and commitment to repayment will unlock the finance you need for a successful launch.