How Do I Get a Startup Business Loan UK?
Brandon Conway
Business Development Executive · Apr 14, 2024 · 7 min read
Getting a business loan as a UK startup is harder than for an established business, but it is far from impossible. The key is knowing which options exist for your stage of development and approaching them in the right order. This guide covers every realistic route to funding for a business under two years old.
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The Start Up Loans scheme: the first port of call
The government-backed Start Up Loans scheme offers personal loans of up to £25,000 per director (maximum £100,000 per business) at a fixed 6% per annum for businesses under three years old. It requires a business plan and cash flow forecast rather than trading history, making it accessible to pre-revenue startups. Free business mentoring is included.
Applications are assessed by licensed delivery partners. The process takes longer than commercial lending (typically 4 to 8 weeks) but the rate is exceptional for a startup with no trading history. The loan is personal to the director rather than to the company, which is worth noting for accounting purposes.
Commercial options from six months trading
From six months of trading with consistent revenue, specialist fintech lenders become available. They use open banking data to assess real-time cash flow rather than relying on filed accounts. Amounts up to £50,000 to £100,000 are typically available from six months. Rates are higher than for established businesses, reflecting the additional risk.
Asset finance is available from the outset for most businesses with a clear need for productive equipment. The loan is secured against the asset, so lenders focus on the asset's value and the director's credit rather than the business's trading history. A new construction company, transport firm, or agricultural business can typically access asset finance from day one.
"The best time to explore your funding options as a startup is when things are going well and you have a few months of positive bank statements to show. Waiting until you need money urgently significantly narrows what is available."
- Brandon Conway, Business Development Executive
Frequently Asked Questions
Can I get a business loan before I start trading?
Conventional lenders require at least some trading history. Pre-trading options include the Start Up Loans scheme, which assesses based on business plan rather than trading; asset finance for specific equipment purchases; and personal loans from directors invested into the business.
The bottom line
Spark Finance works with startup-specialist lenders and can identify the right products for your stage of development. Start at apply.sparkfinance.co.uk.
Check your eligibilityAbout the author
Brandon Conway
Business Development Executive
Brandon is a Business Development Executive at Spark Finance with extensive experience placing asset finance and business loans for UK SMEs. He works closely with businesses that have been declined by high street banks, finding specialist lenders suited to adverse credit and complex trading profiles.
