How to Get a Business Loan in the UK (Start Up Loans and Banks)
The government-backed Start Up Loans scheme lends £500–£25,000 per person at a fixed 6% interest to start or grow a business — delivered as a personal loan, so no trading history needed. Established businesses go to banks and the British Business Bank ecosystem for larger amounts against cash flow or assets.
The Steps
Follow these in order
Each card shows the phase, expected time, and any cost. Data checked against official UK sources(2025-Latest).
0 of 6 steps
- Before You Go 1 hour
Match the finance type to your stage
Not trading yet or under ~2 years: Start Up Loans (personal-format loans, £500–£25,000 per person, up to £100,000 per business, 6% fixed over 1–5 years, no arrangement fee). Trading with accounts: bank term loans, overdrafts, invoice finance, or asset finance. High-growth: British Business Bank programmes and angel/VC routes. The mismatch to avoid is applying for bank debt with no trading history — that is what Start Up Loans exists for.
Click to mark as done
- Before You Go 30 min
Check eligibility basics
Start Up Loans: 18+, living in the UK, right to work, and a viable business idea or young business — most applicants who complete the process with a solid plan are approved. Bank lending: lenders weigh personal credit, trading history (usually 2+ years of accounts), sector, and affordability — a debt-service cover ratio of roughly 1.25× or better on projected cash flow.
Click to mark as done
- Go 1–3 days
Write the business plan and forecast — with the free support
Start Up Loans applicants get a free delivery-partner mentor to shape the plan; use it. The plan must show the use of funds, pricing, market, and above all a cash-flow forecast that visibly repays the loan. For bank lending, the same documents plus accounts and personal financials form the core pack. Weak forecasting is the number-one decline reason for otherwise sound businesses.
Click to mark as done
- Fill / Prepare 1–2 days
Assemble the application pack
Plan, forecast, personal ID and credit consent, bank statements (personal; plus business statements if trading), and Companies HouseUK Companies House — The official register of UK companies. You incorporate a limited company and file annual accounts through it.Click for official info ↗ numbers if registered. For bank term loans add: 2 years of accounts, SA302 tax calculations if self-employed, VAT returns, and details of existing debt. Complete packs get decisions; incomplete packs get questions, then silence.
Click to mark as done
- Submit & Pay 2–12 weeks
Apply and manage the decision process
Start Up Loans decisions typically take several weeks including the mentoring and credit stages; funds arrive as a personal loan you deploy into the business. Bank decisions run from days (overdrafts) to 2–3 months (secured term lending). Compare any offer's arrangement fee, APR, and personal guarantee scope — most bank business lending requires a director's personal guarantee, which puts your home or savings behind the debt.
Click to mark as done
- Follow Up ongoing
Draw down, repay, and keep records clean
Keep the loan in a separate business account so the audit trail is clean — it matters for both tax and the next round of finance. Repay by direct debit, and if trading dips, speak to the lender before missing a payment; forbearance negotiated early is far cheaper than default. A well-repaid first loan is the strongest possible file for larger credit later.
Click to mark as done
FAQ
Frequently Asked Questions
What exactly is a Start Up Loan?
A government-backed scheme delivered by the British Business Bank through delivery partners: an unsecured personal loan of £500–£25,000 per person (up to £100,000 across a business) at 6% fixed interest over one to five years, for starting or growing a business in the UK. It includes free mentoring and 12 months of free business support. Because it is structured as a personal loan, it needs no trading history or collateral — but it is personally repayable regardless of how the business performs.
Do UK business loans require a personal guarantee?
For most bank term lending to small companies, yes — directors (usually anyone with 25%+ of shares) personally guarantee the debt, meaning personal assets stand behind it. Start Up Loans are personal loans by design. Invoice and asset finance are typically self-securing against the invoices or assets funded, so guarantees are less common there. Read the guarantee scope before signing anything.
What if I have poor personal credit?
Start Up Loans run a personal credit check and a CCJ or active insolvency will block it; historic missed payments need explaining in the application. Otherwise: credit unions offer some small business products, CDFIs lend to businesses mainstream banks decline, and invoice finance depends more on your customers' credit than yours. Prepare a clear written explanation of past problems — lenders weigh honesty heavily.
Are grants better than loans?
When you can get them, yes — grants do not get repaid. Check gov.uk's business finance support finder, your local growth hub, and Innovate UK for R&D. The trade-off: heavy competition, match-funding requirements, and slow timelines. A common pattern is grant plus Start Up Loan together — grant for eligible costs, loan for the rest.
Related