The Start Up Loans scheme is a government-backed personal loan to fund a new or young business, delivered through the Start Up Loans Company on behalf of the British Business Bank. From 6 April 2026, the fixed interest rate is 7.5%. Loans run from £500 to £25,000 per individual, with a maximum of £100,000 per business if multiple owners apply. There is no setup or application fee, and successful applicants receive 12 months of free mentoring.

This guide covers what the scheme is, eligibility, loan terms, the application process, pros and cons, and what happens after approval.

What the scheme is

Start Up Loans is a public-policy intervention to help small businesses access finance that traditional commercial lenders find hard to underwrite. It was launched in 2012 and has since funded over 100,000 UK businesses.

The loans are personal loans to the business owner rather than to the business. This matters because the underwriting focuses on the individual’s affordability, not the company’s accounts. New businesses with no trading history can still qualify provided the founder demonstrates a viable plan and personal capacity to repay.

Each successful applicant also receives access to 12 months of free mentoring from a network of experienced business mentors.

Eligibility

Five criteria:

Age and residency

You must be 18 or over and a UK resident with the right to start a business in the UK.

Business stage

Your business must be either:

  • About to start trading, or
  • Trading for less than 60 months at the date of application

The 60-month window means many growing businesses still qualify even after several years of trading.

Affordability

The Start Up Loans Company runs a personal credit check and an affordability assessment. They review your personal income, outgoings, and existing debt. There is no automatic credit-check fail point — the assessment is holistic — but you need to demonstrate capacity to make the monthly repayments.

Business plan and forecasts

You submit a business plan, cash-flow forecast, and personal survival budget. These are the principal underwriting documents. The Start Up Loans Company offers free template documents and support to help you complete them.

Loan purpose

The loan must be used for legitimate business purposes — equipment, premises, marketing, working capital, professional fees. Loans cannot be used for debt repayment, training that leads to a recognised qualification, or speculative investment.

Loan terms

The terms for 2026 applications:

  • Loan amount: £500 to £25,000 per individual applicant
  • Group cap: £100,000 maximum per business across all owner-applicants
  • Interest rate: 7.5% fixed (from 6 April 2026, for new applications)
  • Repayment period: 1 to 5 years
  • Setup fee: None
  • Application fee: None
  • Early repayment: Allowed without penalty
  • Security: No business or personal security required (the loan is unsecured)

The 7.5% fixed rate is competitive against unsecured commercial business lending, particularly for businesses too new for bank underwriting.

How to apply

The standard application process:

1. Apply via startuploans.co.uk or a delivery partner

The Start Up Loans Company works through a network of delivery partners (regional business support organisations and lenders) who handle applications for specific UK regions. You can apply direct or through a partner.

2. Submit core documents

  • Business plan (template available)
  • Cash flow forecast (template available)
  • Personal survival budget (template available)
  • Identity documents
  • Six months of personal bank statements

3. Phone interview

A delivery partner mentor reviews your application and runs a phone interview to test your understanding of the business, the numbers, and the loan purpose. The interview typically lasts 30 to 60 minutes.

4. Underwriting decision

The application moves to formal underwriting. Typical timeline from application to decision is 2 to 6 weeks, depending on documentation completeness and interviewer feedback.

5. Drawdown

If approved, funds are paid into your nominated account within a few working days. Repayments start the following month.

For a wider view of UK business loans including alternatives, compare other UK business loan options.

Pros and cons

Pros

  • No security or personal guarantee required (unlike most commercial unsecured lending)
  • Fixed rate for the loan term, which means certainty in cost
  • Mentoring is included for 12 months
  • No setup fee, no application fee
  • Low credit-rating requirement compared with most banks
  • Pre-trading applicants are eligible

Cons

  • Personal liability for the loan even though it is intended to fund a business
  • £25,000 individual cap is too small for many growth-stage businesses
  • Affordability assessment can be tight if you have other personal debt
  • Slower than alternative lenders — the 2 to 6 week timeline is longer than challenger banks or invoice finance

After approval

The post-approval experience:

Mentor matching

Successful applicants are matched with a mentor for 12 months. The mentor is typically an experienced business person volunteering through the Start Up Loans network. Sessions are usually monthly.

First repayment

The first repayment is typically due one month after drawdown. Subsequent payments are monthly by direct debit.

Reporting

There are no quarterly or annual reporting requirements — unlike some grants, the Start Up Loan does not require milestone delivery. You repay according to the schedule.

Default

Missing payments can damage your personal credit record. The loan is enforceable against you personally, not against the business.

Refinancing or further loans

A second Start Up Loan is possible after the first is repaid in full and the business has continued to trade. Some applicants also use a Start Up Loan as a stepping stone to commercial lending once the business has established a trading record.

Key takeaways

  • Personal loan to fund a new or young business, backed by the British Business Bank
  • £500 to £25,000 per individual, up to £100,000 per business across multiple applicants
  • Fixed 7.5% interest from 6 April 2026
  • Eligibility: 18+, UK resident, business trading less than 60 months
  • No security, no application fee, no setup fee, no early repayment penalty
  • 12 months of free mentoring included with every approved loan

Frequently asked questions

What is the maximum I can borrow under Start Up Loans? £25,000 per individual applicant. Multiple owners in the same business can each apply, up to a £100,000 group cap.

What is the interest rate on a Start Up Loan in 2026? 7.5% fixed, applicable to new applications from 6 April 2026.

Can I apply if my business is already trading? Yes, provided your business has been trading for less than 60 months at the date of application. The 60-month window means most growing businesses still qualify even after several years.

Do I need security or a personal guarantee? No. Start Up Loans are unsecured personal loans. There is no security on business or personal assets. The loan is enforceable against you personally if you default.

How long does a Start Up Loan application take? Two to six weeks from application to decision is typical. After approval, drawdown is usually within a few working days.

Useful resources

Start Up Loans Company https://www.startuploans.co.uk/

British Business Bank — Start Up Loans https://www.british-business-bank.co.uk/start-up-loans/

GOV.UK — Apply for a Start Up Loan https://www.gov.uk/apply-start-up-loan