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Are you a cash-strapped entrepreneur? Or perhaps you’ve got a startup business idea but no funds to move it from on page to in practice? If this sounds familiar, let’s introduce you to startup business loans.
This type of borrowing can be used to cover:
Equipment
Stock
Marketing
Software
Hiring staff
Basically anything your business needs before the cash starts rolling in.
Some startup loans are backed by the government. Others come from traditional banks or alternative finance providers.
The amount you can borrow, interest rates and repayment terms depend on the lender. Expect them to look at your business plan and credit history to determine what’s available to you.
A startup business loan - like any type of business loan - gives your business a sum of money upfront. You then pay it back over an agreed period, usually with interest. The main difference is they’re designed for new businesses that are under 36 months old.
The lender decides how much you can borrow and how long you have to repay it. To work this out, they may ask to look at your business plan, income, credit history and what you need the money for. Because you’re probably a new business with little trading history - there’s a good chance they’ll look into your personal finances too.
Repayments are usually made monthly, so make sure you’re confident your business can afford them, even when things are quiet.
Some loans are secured against an asset - like property or invoices - while others are unsecured. Either way, it’s worth checking the terms and fees before you sign on any dotted line.
An unsecured business loan lets you borrow money without offering anything up as security.
That can be useful if your business is new and doesn’t own much yet or if you’re keen to keep personal possessions off the table.
Because of this, the lender may rely more on your credit history, business plan and forecasted income as your business grows.
A secured business loan uses an asset as security. This could be:
Property
Equipment
Vehicles
Machinery
Stock
Invoices
You may be able to borrow more, but the asset you offer up could be at risk if you miss repayments.
The UK government-backed Start Up Loan scheme helps new businesses borrow money to get started.
These are actually unsecured personal loans that can be used for business purposes.
You can borrow up to £25,000, enjoy a fixed rate of interest at 7.5% and repay in 1-5 years. There are no application fees or early repayment charges. You also get support and guidance to help write your business plan too.
An unsecured business loan lets you borrow money without offering anything up as security.
That can be useful if your business is new and doesn’t own much yet or if you’re keen to keep personal possessions off the table.
Because of this, the lender may rely more on your credit history, business plan and forecasted income as your business grows.
A secured business loan uses an asset as security. This could be:
Property
Equipment
Vehicles
Machinery
Stock
Invoices
You may be able to borrow more, but the asset you offer up could be at risk if you miss repayments.
The UK government-backed Start Up Loan scheme helps new businesses borrow money to get started.
These are actually unsecured personal loans that can be used for business purposes.
You can borrow up to £25,000, enjoy a fixed rate of interest at 7.5% and repay in 1-5 years. There are no application fees or early repayment charges. You also get support and guidance to help write your business plan too.
The right startup loan depends on you, your business and its circumstances.
If you’re new to business or a budding entrepreneur - a government-backed Start Up Loan could be a good place to begin. It offers fixed interest and support for early-stage businesses.
If you don’t have assets to use as security, an unsecured loan might appeal. The lender could focus more on your credit history and how you expect to repay the money.
If you need to borrow a larger amount and have assets available, a secured loan could be worth considering. Just remember the asset is at risk if you miss repayments.
Start by working out exactly how much you need and what it’s for. Avoid borrowing more than necessary. Extra cash may feel comforting, but paying interest on money you didn’t really need is less fun.
Think about the repayment term too. A longer term can lower your monthly payments, but you may pay more interest over the life of the loan.
Startup loans aren’t the only way to fund a new business. Depending on what you need - one of these options may be a better fit.
Business credit cards can help cover smaller costs such as travel, stock or marketing. They’re flexible - but interest can build quickly if you don’t clear the balance each month.
Overdrafts let you borrow through your business current account up to an agreed limit. It can help with short-term cash flow gaps, but fees and interest can make it expensive – especially if you rely on it too often.
Invoice finance lets you borrow against unpaid customer invoices. It can help free up cash while you wait for your clients to pay up. Handy if your customers like taking their sweet time. Just note they might be aware of the arrangement as some providers take over the settlement process.
Asset finance helps you spread the cost of equipment or vehicles. Instead of paying everything upfront, you make regular payments over time. Useful if your business needs kit before it can properly get moving.
Crowdfunding lets you raise money from lots of people - usually through an online platform. There are two types. Equity crowdfunding, where investors get a share of your business, and rewards-based, where supporters get a product or perk instead.
Government grants can offer funding without regular repayments. They’re often aimed at specific industries or regions. Great if you qualify, but applications can take time and there’s a lot of competition.
Yes, you may still have options - but it can be harder. Lenders might offer lower amounts, higher rates or ask you to provide a guarantor.
Usually you do, yes. A business plan helps a lender understand your idea, its costs, goals and how you plan to repay the loan.
It depends on the lender and your circumstances. They tend to look at your business plan and credit history before deciding how much you can afford to borrow and repay.
A government-back Start Up Loan lets you borrow up to £25,000.
Yes - you can use it for things like stock, equipment, marketing, premises or another business-related bill. Check the lender’s rules before spending though, especially if you need it for something out of the ordinary.
It varies by lender. A clear application, tidy documents at the ready and a realistic business plan can help keep things moving.
Page last reviewed: 11/05/2026
Reviewed by: Alex Ryde
