Start Up Loans is a UK government-backed scheme offering unsecured personal loans of £500-£25,000 at a fixed 7.5% APR to people starting or growing a UK business. You can apply before launch or while your business has been trading for less than 5 years. Successful applicants can receive up to 12 months of free mentoring. The programme has supported more than 125,000 business ideas with over £1.25 billion lent since 2012. The official GOV.UK guidance has the current eligibility rules.
- £500-£25,000 per applicant - up to £100,000 total per business if multiple directors apply, all at a fixed 7.5% APR
- No collateral or prior trading history required - pre-launch businesses can apply, subject to a personal credit check
- Up to 12 months of free mentoring - support arrangements vary by the current delivery partner
- 125,000+ business ideas supported - more than £1.25 billion lent since the scheme launched in 2012
- Prepare 3 months of bank statements - you also need a business plan, 12-month cash-flow forecast and personal budget
What Is the UK Government Start Up Loan?
In brief: A Start Up Loan is an unsecured personal loan for business purposes. You can borrow £500-£25,000 at a fixed 7.5% APR over 1-5 years. It is open to UK residents aged 18 or over who are starting a business or have traded for less than 5 years, subject to a personal credit and affordability check.
The Start Up Loan is not a business loan: it is a personal loan that you use for business purposes. The British Business Bank-backed scheme offers £500-£25,000 per applicant at a fixed 7.5% APR. Multiple co-founders can apply, but total lending is capped at £100,000 per business. You need a viable business plan, financial forecasts and a personal credit check. The scheme is available to businesses that have not yet launched or have traded for fewer than 60 months.
For other funding routes, compare the options in our UK business loans hub.
Start Up Loan: Key Facts 2026
| Feature | Detail |
|---|---|
| Loan amount | £500 – £25,000 per applicant. |
| Maximum per business | £100,000 (up to 4 applicants at £25,000 each). |
| Interest rate | 7.5% APR (fixed – same for all applicants). |
| Loan term | 1-5 years. |
| Repayment | Fixed monthly instalments. |
| Security | None – unsecured personal loan; credit check required. |
| Mentoring | 12 months free post-loan business mentoring. |
| Eligibility (age) | UK resident, 18+ (no upper age limit) |
| Eligibility (business) | Trading under 60 months OR pre-revenue/pre-launch. |
| Scheme backer | British Business Bank (government-owned) |
Pros and Cons of Start Up Loans
What Can You Spend a Start Up Loan On?
You can use a Start Up Loan for any legitimate business purpose. The most common uses include:
- Equipment and tools – machinery, computers, specialist software, vehicles
- Stock and inventory – initial product stock for retail, e-commerce, or wholesale
- Marketing and branding – website development, advertising, packaging, business cards
- Premises costs – deposits, fit-out, initial rent (but not ongoing rent)
- Professional services – accountancy, legal fees, licensing, insurance
- Working capital – covering day-to-day costs while the business builds revenue
You cannot use the loan for personal expenses, repaying existing debt, or activities in restricted sectors. Your delivery partner will review your proposed spending as part of the application.
Repayment Examples at 7.5% APR
Start Up Loans are repaid in fixed monthly instalments. The table below shows indicative repayments at the fixed 7.5% APR. Your agreement may differ if the scheme terms change.
| Loan Amount | Term | Monthly Repayment | Total Repaid | Total Interest |
|---|---|---|---|---|
| £5,000. | 3 years. | £156. | £5,599. | £599. |
| £10,000. | 3 years. | £311. | £11,198. | £1,198. |
| £10,000. | 5 years. | £200. | £12,023. | £2,023. |
| £15,000. | 5 years. | £301. | £18,034. | £3,034. |
| £25,000. | 5 years. | £501. | £30,057. | £5,057. |
There are no early repayment penalties – you can pay off the loan ahead of schedule without additional charges.
Who Is Eligible for a Start Up Loan?
You are eligible if you meet all of the following criteria:
- Age – 18 or older (no upper age limit)
- Residency – UK resident based in England, Scotland, Wales, or Northern Ireland
- Business age – trading for fewer than 60 months (5 years), or not yet started
- Business type – sole trader, partnership, limited company, or social enterprise
- Business plan – you must submit a viable plan with 12-month cash flow forecasts
A personal credit and affordability check is part of the application. Your business plan and cash-flow forecast also matter, but an unresolved debt arrangement or other credit issue can affect eligibility. Check the current rules on GOV.UK before applying.
You cannot apply if your business operates in FCA-regulated financial services, property investment, or gambling. Check the full list on the Start Up Loans eligibility page.
How to Apply for a Start Up Loan
The application process requires preparation. Well-prepared applications can move quickly, but timing varies by case and by how long you take to complete the supporting documents.
Application checklist: Prepare a business plan, a 12-month cash-flow forecast, a personal budget and 3 months of matching bank statements. Apply through the official Start Up Loans service, then work with a business adviser while your application is assessed.
- Prepare your business plan – include your product or service, target market, pricing, and competitive advantage. Templates are available free from the Start Up Loans website.
- Create a 12-month cash flow forecast – show projected income, expenses, and how you will repay the loan.
- Write a personal survival budget – detail your personal living costs to demonstrate you can sustain yourself while the business grows.
- Gather supporting documents – 3 months of personal bank statements, proof of UK residency, and photo ID.
- Submit your application – start with the GOV.UK application page, which sends you to the official Start Up Loans service.
- Assessment and interview – your delivery partner reviews your plan and may arrange a call or meeting to discuss it.
- Receive funding – if approved, the loan is paid into your bank account and your 12 months of free mentoring begins.
Approved Delivery Partners
The British Business Bank does not lend directly. It works with delivery partners and an approved lender to assess applications and provide support. Partners change, so use the British Business Bank partners and providers directory for the current list rather than relying on an old provider list.
Free Mentoring: What You Get
Successful applicants can receive up to 12 months of free business mentoring. Your support can cover:
- Refining your business plan and growth strategy
- Financial management, pricing, and cash flow
- Marketing, customer acquisition, and digital presence
- Navigating tax, VAT registration, and compliance
- Overcoming specific challenges as they arise
Mentoring arrangements vary by partner. Treat it as support, not a guarantee of business success, and use independent financial or tax advice where appropriate.
Start Up Loan vs Other Startup Finance Options
Start Up Loans combine a fixed 7.5% rate with no collateral requirement and no minimum trading period. That makes them a clear option for pre-launch founders, subject to credit and affordability checks. Businesses that have traded for longer may have more commercial finance options.
| Option | Amount | Rate | Min. Trading | Security |
|---|---|---|---|---|
| Start Up Loan (BBB) | £500-£25,000. | 7.5% APR fixed. | None (pre-launch ok). | None. |
| Barclays Business Loan | £1,000-£25,000. | 11.2% APR. | None (startups ok). | None. |
| NatWest Business Loan | £1,000-£100,000. | 15.73% APR. | Preferred (account) | None (<£100K). |
| Funding Circle | £10,000-£750,000. | From 6.9%. | 12 months. | PG required |
| Liberis (RBF) | £1,000-£500,000. | Factor rate (not APR). | 4 months + card revenue. | PG for 25%+ owners. |
| Government Grants | Varies. | Free (no repayment) | Varies by scheme. | None. |
If the Start Up Loan cap is not enough, multiple co-founders may apply individually, but total Start Up Loan lending remains capped at £100,000 per business. For larger requirements, compare other government-backed schemes in our government-backed business loans guide.
Related Guides
- Best Business Loans UK 2026 – compare all major lenders for established businesses
- Business Loans for Bad Credit – options if your credit history is poor
- Government-Backed Business Loan Schemes – full overview of BBB programmes
- Unsecured Business Loans – no-security borrowing for trading businesses
- Self-Employed Business Loans – borrowing options for sole traders
- Business Loan Costs and Interest Rates – full breakdown of what you will pay
