What is the Start Up Loans scheme?
The Start Up Loans scheme is a government-backed programme offering personal loans of £500 to £25,000 to new and early-stage businesses in the UK. The loans are unsecured, charge a fixed interest rate of 6% per year, and are repaid over 1–5 years.
Each individual can borrow up to £25,000, and if you have business partners, the total can reach £100,000 per business. The scheme also includes 12 months of free mentoring, which is one of its most valuable features.
Eligibility requirements
To qualify for a Start Up Loan, you must be at least 18, live in the UK, and either be starting a new business or have been trading for less than 36 months. You'll need a viable business plan — the scheme provides templates and support to help you create one.
- You must be a UK resident aged 18+
- Your business must be under 36 months old (or pre-trading)
- You need a credible business plan
- The loan is personal (in your name, not the business)
- Personal credit checks apply, though the scheme is more flexible than banks
💡 The Start Up Loans scheme's free mentoring is worth as much as the money. Take full advantage of the 12 months' support to build your business on strong foundations.
Alternative start-up funding options
If Start Up Loans don't suit your needs, consider these alternatives:
- Small business grants: Free money that doesn't need repaying (but competitive)
- Angel investors: Individual investors who provide capital in exchange for equity
- Crowdfunding: Raise funds from many small contributors via platforms like Crowdcube or Seedrs
- Friends and family: Informal lending (formalise with a written agreement)
- Business credit cards: For smaller amounts and short-term cash flow needs
- Invoice finance: If you have invoices from early customers, you can borrow against them
Bank loans for start-ups
Traditional bank loans are difficult for start-ups to obtain because banks prefer lending to established businesses with a track record. However, some banks have dedicated start-up teams, and the British Business Bank supports various lending programmes that make banks more willing to lend to newer businesses.
If applying for a bank loan, you'll typically need a detailed business plan, financial projections, and possibly personal assets as security. Having existing revenue or confirmed orders significantly improves your chances.
⚠️ Start Up Loans are personal loans — you're personally liable for repayment even if the business fails. Only borrow what you're confident you can repay.
Preparing a strong application
Whether applying for a Start Up Loan or alternative funding, a strong application includes:
- A clear, realistic business plan with financial projections
- Evidence of market demand (customer research, pre-orders, letters of intent)
- Your relevant experience and skills
- Details of any personal investment you're making
- A clear explanation of how you'll use the funds and how they'll generate returns
Get expert business finance advice
Navigating start-up funding can be complex. A specialist business finance broker can assess all available options and help you choose the most cost-effective funding route for your specific situation.
Nesto matches you with FCA-regulated business finance brokers who understand start-up lending. Get matched for free in under two minutes.