Guide
Start Up Loans
Government-backed loans from £500 to £25,000 with fixed 6% interest and free business mentoring.
Start Up Loans are government-backed personal loans for new and early-stage businesses. With a fixed 6% interest rate, no fees, and 15 hours of free mentoring, they're one of the most accessible funding options for UK entrepreneurs.
Who can apply
You can apply for a Start Up Loan if:
- Business age: Trading for less than 3 years (36 months)
- Personal requirements: Aged 18 or over, UK resident
- Visa holders: Must be able to repay the full loan at least 6 months before visa expiry
You can apply for a second loan if you demonstrate good growth and reliable repayments on your first loan.
Excluded sectors
You cannot apply if your business operates in:
- Chemical manufacture or weaponry
- Gambling or adult entertainment
- Banking or money transfer services
- Property investment
- Charities
- FCA-regulated financial activities
Loan terms
How much you can borrow
- Minimum: £500
- Maximum: £25,000 per individual
- Multiple partners: Each partner can borrow up to £25,000 (business maximum £100,000)
Interest and repayment
- Interest rate: 6% fixed per annum (not variable)
- No setup or application fees
- Repayment period: 1 to 5 years (you choose based on affordability)
- Fixed monthly repayments
Important: Personal liability
This is a personal loan, not a business loan. You are personally liable for repayment even if you operate as a limited company. Default will:
- Appear on your personal credit report
- May result in county court judgment (CCJ)
- Affect your personal credit score for 6 years
What you can use the loan for
Permitted uses
- Equipment and machinery
- Stock and inventory
- Business premises (rent deposit, fit-out, lease payments)
- Marketing and promotional expenses
- Payroll and employees
- Working capital and operational costs
Prohibited uses
- Paying off existing debts or refinancing
- Training and education qualifications
- Investment in other businesses
- Property investment (buying to let)
The application process
What you need to apply
- Business plan: Demonstrating viability and market understanding
- Cash flow forecast: Showing you can cover monthly repayments
- Personal survival budget: Your monthly personal expenses breakdown
Don't worry if you haven't completed these yet - Business Support Partners can help you create or review them.
What assessors look for
- Evidence your business will generate sufficient cash flow for repayments
- Feasibility and sustainability of your business model
- Your personal credit history and financial reliability
- Viability of your market opportunity
Timeline
- Highly prepared applicants: 2-3 weeks
- Standard applicants: 2-3 months (depending on support needed)
Free mentoring support
Every successful applicant receives 15 hours of 1:1 mentoring over 12 months, included free with your loan.
What mentoring covers
- Strategic guidance on business decisions
- Support building and refining business strategies
- Access to mentor's knowledge and professional networks
- Confidence and motivation building
- Unbiased assessment of current strategies
Additional support
- Help writing and reviewing business plans and forecasts
- Access to exclusive business offers from Corporate Partners
- Range of templates and how-to guides
Research shows: Businesses that engage with mentoring have significantly higher survival rates.
- Loan amount
- £500 to £25,000 per person
- Interest rate
- 6% fixed per annum
- Repayment period
- 1 to 5 years
- Free mentoring
- 15 hours over 12 months
- Loans issued (2024)
- 10,432 loans
- Total funding since 2012
- Over £1.1 billion
- Average loan amount
- Approximately £12,800
- 5-year survival rate
- 69% (vs 43% for comparable businesses)
Success rates and impact
Programme statistics
- Total loans since 2012: Over 118,000
- Total funding provided: Over £1.1 billion
- 2024: 10,432 loans issued
Economic impact
- 5-year survival rate: 69% for Start Up Loan recipients vs 43% for comparable businesses - a 60% improvement in survival odds
- Employment creation: On average, 1 additional employee job per loan
- Economic return: 5.7x - benefits are almost six times the programme's costs
Who receives funding
- Women: 40-41% of recipients (vs 20% of zero-employee businesses being women-led)
- Formerly unemployed: 31% were unemployed or economically inactive
- Ethnic minorities: 20% of recipients
- Young entrepreneurs: Over £100 million provided to 18-24 year-olds
Practical considerations
Credit impact
- Application triggers a personal credit check
- Regular repayments help build your credit score
- Missed payments significantly damage your credit rating
Multiple loans
You can apply for a second loan if:
- First loan is in good standing with reliable repayment history
- You can demonstrate business growth and sustainability
Alternatives to consider
Start Up Loans suit businesses that:
- Need relatively small amounts (under £25,000)
- Have limited trading history
- Value mentoring support
- Can demonstrate repayment affordability
For larger amounts or equity funding, consider SEIS (up to £250,000) or EIS (up to £5 million per year).
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Check eligibility
Confirm you're 18+, UK resident, and trading for less than 3 years. Check your sector isn't excluded.
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Prepare your business plan
Demonstrate business viability, market understanding, and realistic growth projections.
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Create a cash flow forecast
Show how your business will generate enough income to cover monthly loan repayments.
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Calculate affordability
Use the Start Up Loans calculator to understand your monthly repayment amount.
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Apply online
Submit your application through the Start Up Loans website. Be prepared for a credit check.
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Engage with mentoring
Take advantage of the 15 hours of free support - it significantly improves business survival rates.