How do I get a Start Up Loan?

Starting a business is an exciting and challenging time and one of the first questions you’ll need to answer is how you’ll finance your new business.

A popular route for entrepreneurs is to apply for a Start Up Loan.

In this article we’ll take you through the various stages that make up the Start Up Loan application process, from initial registration, to getting your loan and accessing the free mentoring service.

As with all financial products, it’s a good idea to seek independent specialist financial advice to determine whether a financial product is right for you and your business.

Understanding Start Up Loans

A Start Up Loan is a tailored personal loan designed to help people launch new businesses who have found it difficult to obtain financing through mainstream lenders.

A Start Up Loan is unique compared to typical small business loans because it is a personal loan utilised for business purposes.

Additionally, a Start Up Loan is also unsecured, meaning a borrower doesn’t need to use their house or any other asset as security for loan approval.

Eligible business owners can secure a loan ranging from £500 to £25,000, with a repayment period spanning one to five years.

The loan has a fixed interest rate of 6% per annum, providing a stable and predictable repayment plan.

How do I get a Start Up Loan?

To successfully apply for a Start Up Loan you’ll need to go through the free online application process.

The process has been designed to give you all the support you need with your application whilst always keeping you informed and in control.

Step 1: Registering for a Start Up Loan

The first step to getting a Start Up Loan is to undergo the preliminary eligibility assessment.

To be eligible for a Start Up Loan you’ll need to:

• be at least 18 years of age
• currently live in the UK
• be starting a new business or have been trading for up to 36 months
• be unable to secure finance from anywhere else
• have a business based in the UK
• have the right to work in the UK
• have an eligible loan purpose and business type
• pass our credit and affordability checks.

Should you meet the criteria, you will be invited to register, and kick off your application process.

Initially, you only need to provide basic information such as your name and contact details.

Once you’ve registered, you will receive an email prompting you to set up an account and password.

This will grant you access to our customer portal, where you can complete your application.

Step 2: Completing the Start Up Loan application form

Once you have access to the customer portal you can begin completing your application.

The application is your chance to tell Start Up Loans Company about who you are, how big a loan you’ll be seeking (you can borrow anywhere from £500 to £25,000), and what you’ll spend the loan on.

It’s important to remember that a Start Up Loan can’t be used for any of the following:

• repayment of debt
• training, qualifications, or education programmes
• investment opportunities that are not part of an on-going sustainable business.

Following this you’ll then be asked to undergo a credit check.

A credit check helps the Start Up Loans Company understand your financial history as we use it to help assess your loan application.

Although a poor credit history does not automatically disqualify you from obtaining a Start Up Loan, examining this aspect of your financial background is part of the Start Up Loans Company’s commitment responsible lending.

This step in the application process enables the Start Up Loans Company to safeguard applicants from potentially taking on financial obligations that may be too difficult for them to manage.

Step 3: Working with your Start Up Loans business advisor

After you’ve passed the credit check, you’ll be assigned a dedicated business support partner and offered a business advisor to help you to complete the rest of the application.

Your assigned business adviser plays a crucial role in refining and completing your application.

They can provide support over the phone or via email and might request additional documents to improve your application.

In order to complete your application, you’ll need to prepare and submit a number of documents including your last three months of personal bank statements, and your preliminary application materials, which include:

• a business plan – this is a formal document that outlines your business goals and how you’ll achieve them over a period of time. Its purpose is to provide clarity for you and stakeholders on how your business will generate revenue and be sustainable. Typically, a business plan includes your business objectives, strategies, marketing and sales plans, and financial projections.
• a cash flow forecast - this document provides a prediction of the money coming in and out of your business over a 12-month period. The cash flow forecast contains all projected sources of income for your business, such as sales or payments from customers, and compares these against expected business costs like supplier payments, rent for premises, and taxes. This financial tool is essential for planning and managing your business's cash flow effectively.
• a personal survival budget – this document details your primary sources of personal income, like salary or benefits, along with any monthly expenses you have, like rent, utility bills, and groceries. Unlike a business budget, this budget is tailored to your personal financial situation, providing a clear overview of your finances on a monthly basis.

There are handy templates on the Start Up Loans website to help you draft your business plan, cash flow forecast, and personal survival budget.

If you struggle to complete these documents don’t worry, your business advisor will be able to help.

It’s worth remembering that you’ll have a maximum of 90 days to complete this stage and submit your application for review.

Step 4: Getting your loan decision

With your application complete, your business advisor will conduct a thorough review and then submit your application for evaluation and decision-making.

Your application will then be reviewed by a loan approver prior to a decision being recommended to the Start Up Loans Company’s Finance Provider.

The loan approver will be judging your application against three main criteria:

• your credit worthiness based on your credit check
• whether you can afford the loan repayments using your personal survival budget as a guide
• whether your business as a whole is viable (by examining your business plan and cash flow forecast).

This review typically spans five working days.

However, the loan approver might need to ask for a bit more information from you to help them decide who will make the final decision on whether to lend to you.

Step 5: Funding and post loan support.

Once you’ve secured a loan decision in principle, the finance partner will begin undertaking final checks.

If these checks meet their criteria, they will extend a loan offer to you, which remains valid for 90 days.

Once you’ve received your loan there is a cooling off period of 14 days from the date you sign your Loan Agreement.

Following the receipt of your loan, you are entitled to complimentary post-loan support and up to 15 hours of mentoring, a service available to customers taking out their first loan with the Start Up Loans Company, for up to 12 months.

The frequency and scheduling of these mentoring sessions are flexible, allowing you and your mentor to decide on the most convenient times to meet.

If you have further questions on the Start Up Loans application process you can consult the Start Up Loans Application Process FAQ.

How long does it take to get a Start Up Loan?

Typically, the application process takes around four to six weeks to complete, depending on how quickly you can provide your documents ahead of making a loan decision.

For business owners who already have finalised versions of the documents required, the loan application process can take as little as two weeks whilst, for customers that require more support, the process can take much longer.

The aim of the Start Up Loans Company is to put you in control of the process as much as possible, so the more prepared you are the faster your application can be progressed.

If you’re ready to begin the application process for a Start Up Loan, visit the registration page.