The Start Up Loan, and the thing nobody tells you about it.

£500 to £25,000 per founder at a fixed 7.5%, with free mentoring and no trading history needed. It is a personal loan, so you owe it whatever happens to the company.

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A Start Up Loan is a government-backed personal loan of £500 to £25,000 at a fixed 7.5% a year over one to five years, for businesses fully trading for less than five years. There is no application fee or early repayment fee, and the loan comes with free help writing a business plan and up to 12 months of free mentoring.

Start Up Loans are delivered through the British Business Bank. You can apply without a trading history, an investor or an asset to secure the loan against.

The loan is a personal loan to you. You put the money into the company, and you owe it whatever happens to the business.

Start Up Loan terms

Amount: £500 to £25,000 per person. Each founder applies and is assessed separately, so co-founders can each take a loan.
Rate: Fixed at 7.5% a year for every borrower, whatever the sector or credit history.
Term: 1 to 5 years. There is no application fee and no early repayment fee, so you can pay extra or clear the loan early at no charge.
Eligibility: A UK business fully trading for less than five years, including a business that has not started trading. You must be 18 or over, live in the UK and have the right to work here, the business and what the money is for must be eligible, you must pass credit and affordability checks, and you declare that you cannot get finance elsewhere.
What comes with it: Free guidance on writing the business plan, and up to 12 months of free mentoring if you are approved.
What it is: An unsecured personal loan to you. You owe it personally, even though the money goes into the company.

Terms from GOV.UK, checked 16 September 2026.

Personal liability

Your company's limited liability does not protect you from this debt. If the business fails you still owe the money, and the debt stays with you when the company is dissolved. Decide how much to borrow by checking what your household could repay, as well as what the company's forecast shows.

A worked example of what a Start Up Loan costs

Two founders each take £20,000 at the fixed 7.5% over five years.

Repayments are about £401 a month each.
Total repaid across the term is roughly £24,045 each.
Together, the £40,000 costs about £8,090 in interest.

If the founders sold 10% of the company instead, that 10% could later be worth several hundred thousand pounds. With the loans, the cost is fixed at about £8,090 and the founders keep all of their shares.

Each founder is also personally committed to repaying £401 a month for five years, whatever happens to the company. The decision is whether to carry that personal risk or to give up shares.

Illustrative figures. Check the current rate and your own repayment figures before you apply.

What to check before you apply

1
A plan with numbers in it
Set out what you sell, to whom, at what margin, and what the money will buy. Use the free business plan guidance that comes with the scheme.
2
A cashflow forecast
Assessors check whether you can afford the repayments. Our free cashflow template sets out your cash month by month and shows your runway.
3
Your own credit position
The loan is assessed against your personal credit file. Several hard credit searches in a short period can count against you, so apply for credit selectively.
4
Whether borrowing suits the business
If the money buys something with a clear return, borrowing usually costs less than selling shares. If the product is unproven and years from revenue, fixed repayments can use up the cash the company needs.

Alternatives to a Start Up Loan

Grants — you repay nothing and give up no shares, but competition is strong and decisions can take months. Start with the government finance finder and your local growth hub.
SEIS and EIS equity — investment in exchange for shares, suited to unproven work that is years from revenue. Investors get income tax relief of 50% under the Seed Enterprise Investment Scheme (SEIS) or 30% under the Enterprise Investment Scheme (EIS). See how we handle it.
R&D tax relief — if you are developing something technically uncertain, a claim can return cash on money you have already spent. Try the estimator.
Asset and invoice finance — borrowing secured against the equipment or your unpaid invoices, although lenders often ask for a personal guarantee as well.
Revenue-based finance — repayments that rise and fall with your sales, which suits companies whose revenue varies from month to month. Check the total cost before you sign.

Compare funding routes Talk it through

Common questions

How much can I borrow with a Start Up Loan?

£500 to £25,000 per person, at a fixed 7.5% a year, repayable over one to five years. There is no application fee and no early repayment fee. Because it is a personal loan to you, more than one founder in the same business can apply, and each is assessed separately on their own circumstances.

Is a Start Up Loan a business loan?

No. It is an unsecured personal loan to you, which you then put into the business. You are personally liable for repaying it whatever happens to the company, and your company's limited liability does not protect you from this debt. Decide how much to borrow based on what your household could repay.

How long can we have been trading?

The business must have been fully trading for less than five years, and a business that has not started trading can apply. No trading history is needed, because the assessment looks at you and your business plan.

What support comes with the loan?

Applicants get free guidance on writing a business plan before they apply, and successful applicants get up to 12 months of free mentoring.

What happens if the business fails?

You still owe the money. It is personal borrowing, so the debt stays with you if the company is dissolved. Check the repayments against your household budget as well as the company's forecast.

Should we take one at all?

If the money buys something with a clear return, such as stock that sells, equipment that earns or a hire whose output you can measure, borrowing usually costs less than selling shares, and you keep all of your shares. If the product is unproven and years from revenue, fixed monthly repayments can use up the cash the company needs, and investment in exchange for shares usually suits it better.