Start up loans for businesses

What can start up loans be used for?

Start up loans can be used for a range of purposes, including:

• Buying equipment or inventory
• Renting or buying property
• Hiring staff
• Marketing and advertising
• Covering operating costs until the business starts generating revenue

How can I apply for a start up loan?

With Capitalise, your business can apply for a loan from up to 100+ UK lenders. While there are fewer lenders that specialise in start up loans, we’ll try to match you with a lender that may be able to help your business. 

Here’s how the process works when you apply for a loan with Capitalise:

1. Sign up and check what you could be eligible for
2. Search for a match from our marketplace of 100+ lenders
3. Speak with one of our funding specialists and upload any requested documents to your application profile. 
4. Apply to up to 4 lenders, all in one application 
5. If approved, you can get funding in your account in as little as 48 hours.

What will the interest rates be like?

Typically, the interest rates on a start up loan will be higher than those for more established businesses. New businesses don’t have a long financial history, this makes it hard for lenders to predict how well the business will do, so they see these loans as riskier. Start ups also often face ups and downs in their early years, like unexpected costs and changing income. These are factors which could make keeping up with loan repayments difficult. Because of these perceived risks, lenders charge higher interest rates to better protect themselves in case a business defaults.

However, there are ways to potentially secure better interest rates.If your start up owns high-value assets, like a property, you could leverage your assets as security for a loan. A secured loan provides the lender with a safety net, as they can claim the asset if the loan isn't repaid. To explore what type of lending might suit your start up, you can discuss your needs with one of our funding specialists who can help you find a solution if one is available. 

What fees are associated with start up loans?

Apart from interest, start up loans may come with various fees, including:

• Arrangement fees for setting up the loan
• Early repayment charges if you settle the loan ahead of schedule
• Late payment fees if you miss a repayment

If you’re offered a start up loan, these fees will all be outlined in the agreement. It’s important to check the terms of the loan before you accept it so that you’re aware of the full costs. 

Are there government start up loans in the UK?

The UK government offers a Start Up Loans Scheme providing personal loans for business purposes. These loans are unsecured, and you can borrow between £500 and £25,000 at a fixed interest rate, including free business support and mentoring.

What other options are there for start up businesses?

As well as start up business loans, there may be other financing options available:

• Business overdrafts allow you to overdraw your business account up to an agreed limit, providing a flexible solution for managing cash flow.
• Business credit cards can be a convenient way to manage day-to-day expenses, often offering rewards and the ability to track spending efficiently.
• Angel investors  provide capital for a business start-up, usually in exchange for convertible debt or ownership equity. They can also bring valuable experience and networks to your business.
• Venture capital funding is suitable for startups with high growth potential. Venture capitalists invest in a business against equity and play an active role in its management.
• Crowdfunding platforms allow you to raise small amounts of money from a large number of people, typically in exchange for early access to products or other rewards.

Are there start up business grants?

There’s a number of startup business grants available that offer a valuable funding avenue without the need for repayment. These grants are typically provided by government agencies, local councils, and various private foundations.

The UK Government’s Business Finance Support finder has over 100 support schemes to search from. Each of these schemes are tailored for different industries and regions.