Compare our best startup business loans

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 the 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.  

If you would like a startup business loan, then you can apply for one if your business is less than three years old. The good news is that you don’t have to apply for this at the very beginning of your business journey as 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 can apply for this loan but it’s always worth doing your research to see which loan is the right one for you. 

What you need to apply 

There are some requirements for startup business loans and here are some of the key things to consider before applying: 

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

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. 

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 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.

Business loans are also used by businesses that have been trading for at least two years and you can normally get more money compared to a startup business loan. 

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.