What is the Start Up Loan scheme?
The Start Up Loan scheme is a UK government initiative delivered through the British Business Bank. It provides personal loans of £500-£25,000 at a fixed 6% interest rate to people starting or growing a business less than 36 months old. The scheme also includes 12 months of free business mentoring.
Who can apply?
You can apply if you are a UK resident aged 18 or over, your business is less than 36 months old or not yet started, and you can demonstrate that the business can afford to repay the loan. The loan is a personal loan, not a business loan, so it affects your personal credit file.
Can multiple co-founders apply?
Yes. Each co-founder in your business can apply separately for up to £25,000. The maximum total for one business is £100,000 across up to 4 co-founders. Each application is assessed individually and approval of one co-founder does not guarantee approval of others.
Is 6% a good rate for a startup?
6% is an exceptionally competitive rate for a business with no trading history. Most alternative lenders charge 15%-40% for early-stage businesses. The scheme rate is fixed for the life of the loan regardless of your credit profile, making it the most cost-effective source of early-stage debt finance available in the UK.
What can I use the loan for?
The loan can be used for most legitimate business purposes including equipment, marketing, working capital, and hiring. It cannot be used to repay existing debts, for training courses, or for certain restricted activities. Your business plan must demonstrate how the funds will be used and how the loan will be repaid.