Start-Up Business Loans
The Start-up Business Loans scheme launched in 2012 is being extended according to Prime Minister Liz Truss and Jacob Rees-Mogg. An £884m loan scheme for new businesses is to be greatly expanded, delivering much needed finance to the UK’s array of innovative start-ups,
Start-up Business Loans offer support and funding to new businesses that have been running for up to five years. Since it’s inception in 2012, growth loans have provided more than 95,000 loans to SMEs and start-ups.
The Start-up Business Loans are subject to a fixed interest rate of 6% and provides support and discounts on products, for those who might find it difficult to secure funds from lenders.
With 33,000 new loans available, the programme’s eligibility will be expanded to support businesses trading for up to three years, up from two years. Businesses can apply immediately under the new criteria.
- Start-Up Business Loans of up to £25,000 now available to start-ups that have been trading for up to three years, up from two years
- New ‘second loans’ available for businesses that have been trading for up to five years. providing eligible businesses between 3 and 5 years old a much-needed Government-backed finance to support their expansion at a crucial juncture.
The scheme has backed businesses across the United Kingdom, with more than £54m provided to businesses in Scotland, £42m in Wales and over £12m in Northern Ireland.
Expansion of the Start-Up Business Loans scheme follows the 2021/22 Spending Review, at which the government made the commitment to provide 33,000 loans to the programme over the next three years.
It also builds on key measures the Government has announced for SMEs in particular, including extending the £4.5 billion Recovery Loan Scheme and delivering the Help to Grow schemes, which provide mentoring and free software to thousands of businesses across the UK.
Ms Truss says:
‘I am on the side of all those who take responsibility and do the right thing, from setting up their own businesses to working hard and aspiring for a better life for themselves and their family. Our clear plan will help them to thrive.
‘I know how hard it has been for [SMEs]. They are the lifeblood of our economy. When small businesses succeed, Britain succeeds too.’
Business Secretary Jacob Rees-Mogg said: ‘
‘Encouraging entrepreneurship and new businesses to thrive is critical to growing the economy and raising living standards. From a hair salon in Wales, to a furniture business in Northern Ireland and a cake seller in the Lake District, expanding the Start-Up Loans scheme will support these small businesses through this challenging period and position them to grow – creating jobs and opportunities across the UK.’
What are Start-Up Business Loan Requirements?
To be eligible for a government startup loans, you need to:
- Be over 18 years old
- Have the right to work in the UK
- Be living in the UK
- Have a business plan OR a business that’s been trading for 6 – 24 months
- Have been denied by a bank
- Amount: £500 – £25,000
- Duration: 1 – 5 years
- Interest rate: 6% a year (fixed)
How do Start-Up Business Loans Work?
- Next, your application will be looked at by an approved assessor. They will assess your business plan, capabilities and even your attitude to gauge how serious you are about your endeavour and if it is likely to succeed.
- A business advisor will then contact you to help you gather any other necessary information and complete the application.
- You’ll then receive a decision.
- If approved, you will then need to make monthly repayments over a fixed term.
What does the Start-Up Business Loans Check?
- Your affordability
- How capable your business is of succeeding
What can I use a Start-Up Business Loan for?
You can use a Start-Up Business Loan to purchase or lease anything related to starting your new business. For example, premises, stock, equipment, salaries and promotion. Besides starting a new business, you can use this loan to help buy an existing business or to initiate a franchise. Whatever you are planning to use the loan for, you will need to state it in your business plan clearly.
What Happens If My Business Does Not Succeed?
You will still need to pay it back. If you borrow a loan to start a new business, you will still need to repay the loan even if the business ultimately closes down. Keep this in mind before submitting an application as not repaying the loan back within the agreed period can seriously hurt your chances of getting approved for credit in the future.