Compare our best startup business loans

Take advantage of a startup loan to get your business up and running

A startup loan is for businesses under 36 months old

Startup business loans

Find a startup business loan from a range of leading providers
Funding XchangeTideBarclaysNationwide FinanceSame Day Business LoansFunding XchangeTideBarclaysNationwide FinanceSame Day Business Loans
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Last updated
May 24th, 2024

Is my business eligible for a startup business loan?

If you would like a startup business loan, then you can apply for one so long as your business is less than three years old.

That means you don't have to apply for a startup loan at the very beginning of your business journey. So long as your business is less than 36 months old, the loan can help to finance a new business that is already up and running.

A startup business loan is a lump sum from a lender which can be used for a variety of different things from cash flow to covering staff wages and paying workplace rent. Most businesses under three years old can apply for this loan, but it’s always worth doing your research to see which loan is the right one for you. 

Startup business loans deals

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No years of registered trading required

Nationwide Finance Business Loan

Loan Type
Unsecured term loan
Loan amount
£6,000 to £10,000,000
Loan term
12 months to 72 months
Nationwide Finance is a Direct Funder. They help over 50,000 businesses each year get finance. Same day decision and funds in 24 hours. Rated Excellent 5* on Trustpilot and Google. No.1 direct funder for new starts and established businesses.
No minimum trading history required

Tide Business Loan

Loan Type
Unsecured term loan
Loan amount
£500 to £15,000,000
Loan term
6 months to 72 months
Applying for small business finance online with Tide couldn’t be simpler. They work with their list of funding partners to find the right loan for your business. Depending on the loan, funds could be available in around 24 hours.

Same Day Business Loans

Loan Type
Unsecured term loan
Loan amount
£10,000 to £100,000
Loan term
6 months to 72 months
Online broker specialising in same day business finance. One application. Access to both main & specialist lenders. Rates from 6.9% p.a. Must be UK Ltd co trading over 1 year with turnover £60k+ p.a.
Minimum trading history – 24 months, minimum annual turnover - £100,000

Funding Xchange Business Loan

Loan Type
Unsecured term loan
Loan amount
£1,000 to £500,000
Loan term
1 month to 120 months
Funding Xchange is a credit broker, not a lender. Funding Xchange puts you in control of your business funding giving you access to indicative funding offers within 3 minutes.
Minimum annual turnover of £100,000, trading history of 18 months and Companies House registration are required.
No minimum trading history

Barclays Business Loan

Loan Type
Unsecured term loan
Loan amount
£1,000 to £5,000,000
Loan term
12 months to 240 months
Subject to application, financial circumstances and borrowing history. Terms and conditions apply. Eligibility criteria applies. Maximum loan amount based on application. No arrangement fees on loans up to £25k. Other terms may be available.

What is considered a startup?

A startup is a company that is new and in the initial stages of business. It is normally a small business funded by the founders, but startups also seek investment elsewhere to get their business off the ground.

A startup can also be in ‘startup’ mode for as long as three years, so it is not isolated to the first year.  

Between 1979 and 2023, the total business register increased by[1]
4.3million

What do I need to apply?

Requirements may differ for startup business loans - it'll depend on the provider. But there are some more general things that you'll need to think about: 

You need to be:

  • 18 or over

  • A UK resident

  • Eligible to work in the UK

Your business must be:

  • Less than three years old

  • UK-based and registered

If your business ticks the boxes above, then you need to start thinking about the application process. Before you can apply for the loan you’ll need to create a business plan and then a cash flow forecast. You’ll need to demonstrate the position of your business and illustrate how you plan to use the loan to ensure your business is a success. 

How is a startup loan different to a typical business loan?

A startup loan acts in a similar way to a business loan. It requires you to go through an application process and then the lender will decide if your business can use the loan and then repay it within a specific timeframe. Some startup loans, including the government scheme, also come with the benefit of support from business advisers.

Startup loans normally come with a greater risk for lenders, so you might have to pay a higher interest rate or have a personal guarantee. You might also find that lenders look at your personal credit history if the business is still in the early stages and doesn't have a credit history of its own. It's a good idea to try and limit your debt before applying, as lots of credit applications in a short space of time could be seen as unfavourable to lenders.

Traditional business loans are typically used by businesses that have been trading for at least two years. You can normally borrow more money with a traditional business loan compared to a startup business loan too. 

How to choose a startup business loan

Follow these tips to decide which startup loan is right for your business

Work out how much you need

Create a business plan and think about how the loan will positively impact your business. Then search for lenders that are currently offering that amount of money.

Look at interest rates

Once you’ve decided on the loan amount, compare the interest rates as these will vary and could impact your decision.

Find the lowest APR

Compare as many startup loans as possible and try to find the lowest annual percentage rate (APR) for the amount you would like to borrow.

What is the government-backed Start Up Loan?

The Start Up Loan is a scheme from the government which aims to help small businesses via a loan of £500 to £25,000. To apply for this loan you’ll need to live in the UK and be over 18, and have started (or about to start) a UK business that’s been trading for less than three years.

This loan differs slightly from a business loan as it is an unsecured personal loan, which means the business will have a credit check during the application process. If successful, you can repay the loan over a period of time, ranging from one to five years. The positives of this loan is that it charges a fixed interest rate of 6% per year and there’s no application fee. 

Pros and cons

Pros

You’ll have money to start your business or continue to grow it
Keep control of the business as you haven’t given away equity
Build a positive credit history if you pay back the loan on time
Startup loans tend to be unsecured, so you won't usually need to put forward any assets as security

Cons

Interest rates can be higher making it harder to pay back the loan
Startup loan fees can be an extra burden on businesses
Eligibility can be strict so some businesses might not find a suitable loan

Things to look out for

Fees

If you apply for the government-backed Start Up Loan there are no fees involved, but other startup loans could come with some fees attached. 

For example, there might be an early redemption fee if you wish to repay the loan before the end of the agreed term, or an application fee which can be a percentage of the loan amount. You might find lenders with no fees, so always look into the terms and conditions of the loan to understand the full story and be sure to check and compare fees when deciding on a loan to apply for.

Eligibility

The eligibility criteria can be strict. Ensuring you have good credit history could help, if you don't then you may not be eligible or you may need to provide a guarantor.

Startup loans can be a good option to kick-start your idea or manage cashflow, so long as your business is under three years old. Just bear in mind they can be difficult to obtain, and make sure you're comfortable with the fees and repayment schedule.

Alternative funding options for start ups

Business loans

If your business is more than three years old, you can look into applying for a traditional business loan. This loan is a way to get external funds to run or grow your business. 

Crowdfunding

Pitch your business idea online and offer perks or rewards to investors if your target's met. Crowdfunding can be a good alternative to startup business loans, but remember getting the amount you need can be a slow process.

Business grants

Business grants don’t have to be paid back and there's no interest to pay either. Small business grants are available from your local council and could provide funds to help your business idea.

Alternative funding options for start ups

Business loans

If your business is more than three years old, you can look into applying for a traditional business loan. This loan is a way to get external funds to run or grow your business. 

Crowdfunding

Pitch your business idea online and offer perks or rewards to investors if your target's met. Crowdfunding can be a good alternative to startup business loans, but remember getting the amount you need can be a slow process.

Business grants

Business grants don’t have to be paid back and there's no interest to pay either. Small business grants are available from your local council and could provide funds to help your business idea.

FAQs

Can I get a startup business loan for a home business?

Yes, you can get a startup business loan for a home business. However, you should still check with each lender to check if your business is eligible to apply.

Can I use a startup loan to pay for wages?

Yes, you can use a startup loan to pay for wages but only if you include wages as part of your loan application.

Do I need a business account to apply for a startup loan?

Some lenders require you to have a business account with them to qualify for a business loan, but some are more flexible. Ask before you apply.

Can I repay a startup loan early?

Yes, you can repay a startup loan early but you may get an interest penalty based on your remaining loan balance. Check with your lender if you can afford to repay your loan early.

What happens if I can't keep up with repayments?

If you fall behind in repayments, or find you're struggling during the term of the loan, it's important to notify the loan provider straightaway. If you ignore the situation, it can have a negative impact on your credit file - potentially on your personal credit file too - making it harder to get other forms of credit or even certain types of jobs.

Are startup loans hard to get?

Startup loans can be difficult to obtain - it depends on the information the provider requires and how quickly you're able to provide it. Carrying out research and ensuring you have a thorough business plan can make the process more straightforward and hopefully reduce the chance of disappointment.

About the author

Lucinda O'Brien
Lucinda O'Brien has spent the past 10 years writing and editing content for regional and national titles. She applies her industry knowledge to ensure readers can make confident financial decisions.

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References

1. UK small business statistics 2023 Companies register activities - Official statistics