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. It charges a fixed 7.5% interest. You can use it to start or grow a business. It is given as a personal loan. It is for new businesses or businesses trading under 60 months. So you do not need a long trading history. Established businesses go to banks and the British Business Bank ecosystem. They borrow larger amounts against cash flow or assets.
At a glance
- Cost:
- 7.5% fixed (Start Up Loans) to 10–30%+ (online lenders); arrangement fees 0–2%
- Total time:
- From a few days (Start Up Loans: weeks) to 2–3 months (secured bank lending)
- Steps:
- 6 steps
- Where to apply:
- startuploans.co.uk
Last reviewed October 2026 against official sources. Re-checked annually · next review due October 2027.
The Steps
Follow these in order
Each card shows the phase, expected time, and any cost. Data checked against official UK sources(October 2026).
0 of 6 steps
- Before You Go 1 hour
Match the finance type to your stage
Are you not trading yet, or trading under 5 years (60 months)? Look at Start Up Loans. These are personal-format loans of £500–£25,000 per person. They go up to £100,000 per business. The rate is 7.5% fixed over 1–5 years. There is no arrangement fee. Are you trading with accounts? Look at bank term loans, overdrafts, invoice finance, or asset finance. Are you high-growth? Look at British Business Bank programmes and angel/VC routes. Do not apply for bank debt if you have no trading history. That is the mismatch to avoid. Start Up Loans exists for that case.
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- Before You Go 30 min
Check the basic rules to apply
For Start Up Loans, you must be 18+. You must live in the UK. You must have the right to work. You must have a business idea that can work, or a business trading under 60 months. Most people who finish the process with a solid plan are approved. For bank lending, lenders look at your personal credit. They look at your trading history. This is usually 2+ years of accounts. They look at your sector and what you can afford. They want a debt-service cover ratio of about 1.25× or better on your projected cash flow.
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- Go 1–3 days
Write the business plan and forecast — with the free support
If you apply for Start Up Loans, you get a free mentor from a delivery partner. The mentor helps you shape the plan. Use this help. The plan must show how you will use the money. It must show your pricing and your market. Most of all, it must show a cash-flow forecast. The forecast must clearly show that you can repay the loan. For bank lending, you need the same documents. You also need accounts and your personal financial details. These form the core pack. Weak forecasting is the number-one reason lenders turn down otherwise sound businesses.
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- Fill / Prepare 1–2 days
Assemble the application pack
You need your plan and forecast. You need personal ID and credit consent. You need bank statements. These are personal statements, plus business statements if you trade. You also need 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 you are registered. For bank term loans, add these. Add 2 years of accounts. Add SA302 tax calculations if you are self-employed. Add VAT returns. Add details of debt you already have. Complete packs get decisions. Incomplete packs get questions, then silence.
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- Submit & Pay 2–12 weeks
Apply and manage the decision process
Decisions on Start Up Loans usually take several weeks. This includes the mentoring and credit stages. The money arrives as a personal loan. You put it into the business. Bank decisions run from days for overdrafts. They can take 2–3 months for secured term lending. Compare the arrangement fee, APR, and personal guarantee on any offer. Also check how wide the guarantee is. Most bank business lending needs a personal guarantee from a director. This puts your home or savings behind the debt.
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- Follow Up ongoing
Draw down, repay, and keep records clean
Keep the loan in a separate business account. This keeps the audit trail clean. It matters for tax. It also matters for the next round of finance. Repay by direct debit. If trading dips, speak to the lender before you miss a payment. Help agreed early is far cheaper than default. A first loan that you repay well is the strongest file you can have for larger credit later.
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Be Careful
Don't make these mistakes
Applying to a bank with no trading history. Bank lenders usually want 2 or more years of accounts, so applying for bank debt with no trading history is the mismatch to avoid. Start Up Loans exists for that case: £500 to £25,000 per person at a fixed 7.5% for businesses trading under 60 months.
Skipping the free mentor and a proper forecast. If you apply for Start Up Loans, you get a free mentor from a delivery partner, so use that help. The plan must show how you will use the money, your pricing, your market, and a cash-flow forecast that clearly shows you can repay. Weak forecasting is the number-one reason lenders turn down otherwise sound businesses.
Submitting an incomplete application pack. Complete packs get decisions, while incomplete packs get questions, then silence. You need your plan and forecast, personal ID and credit consent, and bank statements, plus 2 years of accounts, SA302 tax calculations if self-employed, VAT returns, and details of debt you already have for bank term loans.
Signing without reading the personal guarantee. Most bank business lending needs a personal guarantee from a director, which puts your home or savings behind the debt. Compare the arrangement fee, APR, and personal guarantee on any offer, and check how wide the guarantee is before you sign anything.
Missing a payment without telling the lender. If trading dips, speak to the lender before you miss a payment, because help agreed early is far cheaper than default. Keep the loan in a separate business account, so the audit trail stays clean for tax and for the next round of finance.
FAQ
Frequently Asked Questions
What exactly is a Start Up Loan?
It is a government-backed scheme. The British Business Bank runs it through delivery partners. It is an unsecured personal loan of £500–£25,000 per person. It goes up to £100,000 across a business. It charges 7.5% fixed interest over one to five years. It is for new businesses or businesses trading under 60 months in the UK. It includes free mentoring. It also includes 12 months of free business support. It is set up as a personal loan. So it needs no trading history or collateral. But you must repay it yourself, whatever happens to the business.
Do UK business loans require a personal guarantee?
Yes, for most bank term lending to small companies. Directors personally guarantee the debt. A director need not hold any shares. 25%+ of shares or voting rights is the definition of a person with significant control (PSC), not of a director. Lenders commonly seek guarantees from directors and/or major shareholders. This means personal assets stand behind the debt. Start Up Loans are personal loans by design. Invoice and asset finance are usually secured by the invoices or assets they fund. So guarantees are less common there. Read how wide the guarantee is before you sign anything.
What if I have poor personal credit?
Start Up Loans run a personal credit check. A CCJ or active insolvency will block it. You need to explain missed payments from the past in the application. There are other options. Credit unions offer some small business products. CDFIs lend to businesses that mainstream banks turn down. Invoice finance depends more on the credit of your customers than yours. Write a clear explanation of past problems. Lenders value honesty a lot.
Are grants better than loans?
Yes, when you can get them. You do not repay grants. Check the business finance support finder on gov.uk. Also check your local growth hub. Check Innovate UK for R&D. But there are downsides. Competition is heavy. You often need match funding. The timelines are slow. A common pattern is to use a grant plus a Start Up Loan together. The grant covers eligible costs. The loan covers the rest.
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