In the UK, you can get a start-up loan from several banks and organisations, and all you would need to do is to visit their website and complete the application forms. The application process is relatively easy and can be completed quickly, depending on whether or not you have all the necessary information handy.

The processes involved are usually a variation of these three steps:

  • Register your details
  • Complete the application form
  • Finalise your business documents.

However, there is usually more to getting a start up business loan than filling out application forms, as we’ll see in the next few segments.

What Exactly Are Start-up Business Loans?

Before we describe what a start-up loan is, we must talk about start-ups.  A start-up is a business that has not been operating for very long. Any business that hasn’t been in operation for up to three to five years is considered a start-up, depending on what organisation you ask. But when start-up loans are concerned, any business older than two years is no longer considered to be a start-up.

So then a start-up loan is a loan given to businesses with little to no business history (start-ups). These loans are often backed by the government and are meant to assist small businesses with little or no capital to get off the ground. Because of their business’s history (or lack thereof), businesses can get start-up loans with no collateral, and that’s why they are so attractive and sought after.

In addition to start-up capital, businesses also get mentoring and support from the government and related organisations when they receive a start-up loan.

Who Can Get A Start-up Loan?

Start-up loans are available to almost anyone, as long as they meet a few qualifications. These include

A Great Credit Score

The first and most important requirement is a great credit score. Because start-up loans require no collateral, lenders have no way of guaranteeing the payment of the loan—they have no way of knowing if you’ll be able to pay back. They mitigate this risk by only granting loans to individuals who have a good credit score because a good credit score indicates a great record with past credit facilities. This means that you’re more likely to pay back.

A Business Plan

Because anyone can apply for a start-up loan, another way, lenders vet who they lend to is the applicant’s business plan. Individuals and businesses without a viable business plan are likely to be rejected in their loan applications

Your Financial Status

Even though a start-up loan is granted to you for your business, you will still be liable to pay back if your business plans change in the future. Although you don’t need any collateral to qualify for a start-up loan, you are fully expected to pay back the loan, as well as any interests it might have accrued over your loan term. Lenders will check your key sources of income and your expenses to see how well you can manage the repayment should your plans change.

Can Established Businesses Get A Start-up Loan?

As explained before, a start-up isn’t strictly a business without any history. It could also be a business that hasn’t been existing for a very long time. These kinds of businesses can also apply for a start-up loan. In fact, they may have a better case than a business without any history because they have a history of transactions as well as proof of the viability of their business model.

What Can Prevent You From Getting A Start-up Business Loan?

Bad Credit

Lenders like banks give out money with the expectation that you’ll pay back in due time. With a bad credit score, your ability to pay back is questionable, and that can often defer lenders from granting your loan application

Risky Business Model/Industry

As mentioned earlier, your business is only going to be supported if it has a viable model. This means that there must be a demand for your business and that your cash flow projections must be able to accommodate the repayment. If these are not adequately reflected in your plan, your loan application may be denied.

Little To No Business Experience

It’s not news that it’s more difficult for an individual with no business experience to successfully start and run a business than it is for someone with some business experience. Your lack of experience in the business arena can be an indication that you’re more likely to fail (even if you don’t feel that way). As a result, lenders may be more sceptical about borrowing you money

Alternatives To Start Up Business Loans

If you’re unable to obtain a start-up loan, there are several other funding options you can seek for your new/young business. But just like start-up loans, they also have conditions attached to them, and you’ll need to put some thought into which ones are best for you.

Family And Friends

Often, when individuals are unable to raise money through loans and grants, they turn to their friends and family to borrow the money. Sometimes, these are even considered the first options before considering banks and grants because your friends and family are more likely to support you

Venture Capitalist Funds

A venture capitalist is an individual or a company that looks for start-ups and small business to invest in. Getting a venture capitalist to invest in your business will usually depend on the viability of your business model, and its potential for growth.


Grants are financial aids offered by the government and sometimes large organisations to business. They are often given to businesses that have the potential to improve the status quo and change lives.

How Is A Start-up Loan Different From Other Kinds Of Business Loans?

Even though they are very similar and maybe even mistakable for each other, start-up loans are very different from grants and small business loans


The main difference between a grant and a start-up loan is that you’re not expected to pay back a grant. Another difference is that while you’re expected to spend your start-up loan on your business, you’re not specifically required to do so. With a grant, however, you have to meet specific requirements.

Small Business Loan

Small business loans are loans provided to small businesses strictly for business purposes. Small business loans can be given by a variety of lenders, including banks. Businesses that don’t qualify for start-up loans can apply for small business loans because they have less restrictive requirements, and can be processed fairly easily.