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A Guide to Start-up Business Loans

Our essential guide to Start-up business funding

What is a start-up business loan?

A start-up loan is a type of business finance, which is provided to aid individuals that are in the early stages of starting their business, or are looking to accelerate and grow their new business. Businesses that have traded for less than two years are often classed as a ‘new start’.


Why do I need a start-up business loan?

Getting a new business started is often a huge challenge, and there are administrative and set up costs involved. A start-up loan can help you purchase stock or equipment, lease or purchase business premises, or to cover marketing and advertising costs to get the business off the ground.


Can I get a start-up loan if I have bad credit?

When reviewing a business loan application, lenders are likely to search the business owners’ credit report in addition to checking the business credit score to calculate the risk of the loan. The credit scores therefore have a direct impact on a loan application.

You may still be able to obtain a start-up loan if you have a poor personal credit rating. High street banks generally require a higher level of creditworthiness from individuals applying. However, there are various alternative finance providers across the UK that are able to cater to business owners that have poor credit. As a result, you should expect the interest rate to be higher than a high street bank loan, as the risk to the lender is greater.

You can find further information on this topic here – (do we have a page for this yet? Shall we add the link in here once its done?)


Do I need to provide security for a start-up loan?

Many start-up business loans are unsecured. This means you do not need to provide security, such as a legal charge on a property or an asset to support the loan. Most lenders will request that company directors provide a personal guarantee.

There are also secured loan options available to new start businesses. As collateral is being provided, the risk to the lender is reduced, so this will mean you are more likely to be approved and you may receive a reduced rate compared to an unsecured start-up loan.


What information do I need to get a start-up loan?

The information required to apply for a start-up loan varies from lender to lender, however you should expect to provide a Business Plan and Financial Projections as well as your personal information as the business owner. If your business is already trading, the lender will likely request that you provide recent business bank statements.

Most lenders will require you to have a business bank account set up to qualify.


How much will a start-up business loan cost?

The cost for a start-up loan varies from lender to lender. You will be charged an annual interest rate, and there may be an arrangement fee included too. The interest rate is dependent on how risky the loan is to lender. Lenders review the risk of the loan but looking at the credit profile of the business and the business owners, along with the supporting information such as a business plan and financials.


What business start-up funding is available?

There are different options available to business owners that are looking to obtain finance to start their business.

Bank Loans – These are traditional loans from high street banks. Due to the lack of trading history, it is often difficult for a new start business to receive finance from the high street banks, as the eligibility criteria is often strict.

Alternative Finance –There are a number of alternative finance providers that offer start-up business loans; these are provided on an unsecured or secured basis. These loan providers have less stringent eligibility criteria, offering more flexibility for business owners, and as such, you should expect to see a higher interest rate than you would see from a high street bank.

Government Loans – Businesses can also receive start-up funding via the Government Start-Up Loan scheme. This facility is available to individuals that are looking to start a business, or if they have a new business that they want to grow. You can find more information on Government loans here.

Peer to Peer – A peer-to-peer lending platform connects people that are looking to invest with individuals or businesses that are looking for finance. The P2P platform acts as the intermediary between the lender and the borrower. No company shares are given up as part of the agreement, the finance is repaid like a standard loan. Interest rates are usually heavily weighted on the business and personal credit scoring and personal guarantees are likely to be requested from the business owners.

Crowdfunding – Crowdfunding is similar to peer to peer lending in which it is a way of raising finance by asking for a group of individuals or businesses to each invest a small amount of money to make up the amount required. Crowdfunding differs however, as in return for providing finance, the investor will receive shares in the business.


Find out how Newable can help source a start-up loan for your business by contacting our Finance Specialists on 0208 142 4385, or by completing our enquiry form.


How can I access a start-up loan?

You can apply for a Loan by submitting an application to a lender.

You will be required to demonstrate that you fulfil the eligibility and criteria set by the lender. The documentation required is dependent on the finance provider, however, you should expect to provide a business plan and financial projections.

Here at Newable Finance, we have a team of Finance Specialists who are able to navigate you through the application process. Find out how Newable can help with your finance application by calling us today 0208 142 4385, or by completing our enquiry form.


What other types of finance is available to businesses in the UK?

There are many different types of finance available to new start and trading businesses. Facilities include:

Whatever your requirements are, whether it is a start-up loan or a standard finance product, we take the stress and hassle out of finding the right finance solution for your business.

Get started now, and one of our Finance Specialists will give you a call back to discuss your requirements in further detail.

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