Start Up Loans is a UK government-backed scheme offering personal loans of £500–£25,000 at a fixed 6% APR to new and early-stage businesses (under 3 years old), with free mentoring included. In 2026, the scheme – delivered by the British Business Bank – has supported over 100,000 businesses with more than £1 billion lent since 2012. It is the primary dedicated startup funding route for UK businesses that cannot yet access bank lending.
- £500–£25,000 per applicant - up to £250,000 per business if multiple directors apply, all at a fixed 6% APR
- No security or trading history required - available to pre-launch businesses and those under 36 months old
- Free 12-month mentoring included - delivered through approved partners like Virgin StartUp and NatWest
- 100,000+ businesses funded - over £1 billion lent since the scheme launched in 2012
- 4–8 weeks from application to funding - assessed on your business plan, not your credit score
What Is the UK Government Start Up Loan?
The Start Up Loan is a government-backed personal loan (not a business loan) of £500–£25,000 per director/partner at a fixed 6% APR, delivered by the British Business Bank through approved delivery partners. Multiple co-founders can each apply for up to £25,000, giving a combined maximum of £250,000 per business. Assessment is based on your business plan and financial forecasts – not your trading history or business credit score. It is available to businesses that have been trading for fewer than 3 years (36 months).
Start Up Loan: Key Facts 2026
| Feature | Detail |
|---|---|
| Loan amount | £500 – £25,000 per applicant |
| Maximum per business | £250,000 (up to 10 applicants at £25,000 each) |
| Interest rate | 6% APR (fixed – same for all applicants) |
| Loan term | 1–5 years |
| Repayment | Fixed monthly instalments |
| Security | None – unsecured |
| Mentoring | 12 months free post-loan business mentoring |
| Eligibility (age) | UK resident, 18+ (no upper age limit) |
| Eligibility (business) | Trading under 36 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 6% APR
Start Up Loans are repaid in fixed monthly instalments. The table below shows what you would repay at the fixed 6% APR over different loan amounts and terms.
| Loan Amount | Term | Monthly Repayment | Total Repaid | Total Interest |
|---|---|---|---|---|
| £5,000 | 3 years | £152 | £5,476 | £476 |
| £10,000 | 3 years | £304 | £10,952 | £952 |
| £10,000 | 5 years | £193 | £11,600 | £1,600 |
| £15,000 | 5 years | £290 | £17,400 | £2,400 |
| £25,000 | 5 years | £483 | £28,999 | £3,999 |
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 36 months, 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
Poor personal credit does not automatically disqualify you – the assessment is primarily based on the strength of your business plan. However, an active bankruptcy or Individual Voluntary Arrangement (IVA) may affect your application.
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 is straightforward but requires preparation. Allow 4–8 weeks from application to funding.
- 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 – apply via startuploans.co.uk or through an approved delivery partner such as Virgin StartUp or Transmit Startups.
- 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 through approved delivery partners who assess applications and provide mentoring. The main partners include:
- Virgin StartUp – one of the largest delivery partners, offers online application and mentoring network
- Transmit Startups – covers all UK regions, strong track record with first-time founders
- NatWest – combines Start Up Loan delivery with business banking services
- The Prince’s Trust – focuses on applicants aged 18–30 and those from disadvantaged backgrounds
All delivery partners offer the same loan terms (6% APR, up to £25,000). The difference is in their mentoring approach and regional coverage. You can apply to more than one partner if your first application is unsuccessful.
Free Mentoring: What You Get
Every Start Up Loan includes 12 months of free business mentoring – a benefit worth an estimated £3,000–£5,000 if purchased privately. Your mentor is matched to your industry and business stage and can help with:
- 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 is delivered through your delivery partner, typically via monthly calls or meetings. You are not obligated to use it, but the British Business Bank reports that borrowers who engage with mentoring have higher business survival rates.
Start Up Loan vs Other Startup Finance Options
The Start Up Loan scheme offers the lowest fixed rate (6% APR) of any widely accessible UK startup finance product and requires no security or trading history. For very early-stage businesses (pre-revenue, under 6 months), it is the most accessible route. Established businesses with 12+ months of trading history have more options.
| Option | Amount | Rate | Min. Trading | Security |
|---|---|---|---|---|
| Start Up Loan (BBB) | £500–£25,000 | 6% 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 | 12.24% APR | Preferred (account) | None (<£100K) |
| Funding Circle | £10,000–£250,000 | From 6.9% | 12 months | PG required |
| Liberis (RBF) | £1,000–£500,000 | Factor rate (not APR) | 6 months + card revenue | None |
| Government Grants | Varies | Free (no repayment) | Varies by scheme | None |
If the Start Up Loan cap is not enough, consider combining it with a government grant (no repayment required) or applying to multiple delivery partners if you have co-founders. See our guide to government-backed business loan schemes for the full range of options.
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
