Start-Up Business Loans UK: How to Get Funding

What is the Start Up Loans scheme?

The Start Up Loans scheme is a government-backed programme offering personal loans of £500 to £25,000 to new and early-stage businesses in the UK. The loans are unsecured, charge a fixed interest rate of 6% per year, and are repaid over 1–5 years.

Each individual can borrow up to £25,000, and if you have business partners, the total can reach £100,000 per business. The scheme also includes 12 months of free mentoring, which is one of its most valuable features.

Eligibility requirements

To qualify for a Start Up Loan, you must be at least 18, live in the UK, and either be starting a new business or have been trading for less than 36 months. You'll need a viable business plan — the scheme provides templates and support to help you create one.

• You must be a UK resident aged 18+
• Your business must be under 36 months old (or pre-trading)
• You need a credible business plan
• The loan is personal (in your name, not the business)
• Personal credit checks apply, though the scheme is more flexible than banks

Alternative start-up funding options

If Start Up Loans don't suit your needs, consider these alternatives:

• Small business grants: Free money that doesn't need repaying (but competitive)
• Angel investors: Individual investors who provide capital in exchange for equity
• Crowdfunding: Raise funds from many small contributors via platforms like Crowdcube or Seedrs
• Friends and family: Informal lending (formalise with a written agreement)
• Business credit cards: For smaller amounts and short-term cash flow needs
• Invoice finance: If you have invoices from early customers, you can borrow against them

Bank loans for start-ups

Traditional bank loans are difficult for start-ups to obtain because banks prefer lending to established businesses with a track record. However, some banks have dedicated start-up teams, and the British Business Bank supports various lending programmes that make banks more willing to lend to newer businesses.

If applying for a bank loan, you'll typically need a detailed business plan, financial projections, and possibly personal assets as security. Having existing revenue or confirmed orders significantly improves your chances.

Preparing a strong application

Whether applying for a Start Up Loan or alternative funding, a strong application includes:

• A clear, realistic business plan with financial projections
• Evidence of market demand (customer research, pre-orders, letters of intent)
• Your relevant experience and skills
• Details of any personal investment you're making
• A clear explanation of how you'll use the funds and how they'll generate returns

Get expert business finance advice

Navigating start-up funding can be complex. A specialist business finance broker can assess all available options and help you choose the most cost-effective funding route for your specific situation.

Nesto matches you with FCA-regulated business finance brokers who understand start-up lending. Get matched for free in under two minutes.