Most lenders want two or more years of accounts. A business that is new, or not yet trading, has fewer options, but it does have some, and one of them is designed for exactly this.
Why start-ups find borrowing hard
A lender prices risk from evidence. An established business has filed accounts, months of bank
statements and a repayment history; a new one has a plan. Without trading data, a mainstream
lender either declines or leans entirely on the founder: personal credit history, personal income,
and a personal guarantee.
The main routes
The government-backed Start Up Loan
The Start Up Loans programme, part of the British Business Bank, lends to individuals to start
or grow a business that has been trading for a short time. It is an unsecured personal loan for
business purposes, at a fixed rate that is the same for every borrower, and it comes with
mentoring and help with a business plan. The lender’s published terms are in the table
below. The trade-off is the cap on the amount and an assessment that takes weeks rather than
hours.
Alternative lenders with short minimum trading periods
Some online lenders will consider businesses with a few months of trading, usually for smaller
amounts and with a personal guarantee. Expect a higher price than an established business would
pay for the same sum.
Asset finance for equipment
If what you need is a van, a machine or kitchen equipment, asset
finance is often easier to obtain than a loan, because the asset itself secures the deal.
Grants and local schemes
Some councils, growth hubs and sector bodies run grant or loan schemes for new businesses. They
open and close often, so check your local growth hub rather than relying on a list.
Making a stronger application
- A business plan with a cash-flow forecast that shows, month by month, how the repayment is
met.
- Evidence of demand: early sales, signed contracts, letters of intent, a waiting list.
- A clean personal credit file. Check it with the main agencies before you apply.
- A sensible ask. Borrowing for a defined purpose at a size your forecast supports reads very
differently from a round number with no plan behind it.
Costs to watch
For a new business the risk is less the interest rate than the repayment arriving before the
revenue does. Model the monthly repayment against a slow first year, not your best case. Our
calculator will show the monthly figure for any amount,
rate and term.
- Amount
- £10,000 to £750,000
- Term
- up to 6 years
- Rate
- from 6.9%a floor, not typical
- Speed
- Decision in as little as 5 minutes; funds typically within 48 hours.
Fees, security and eligibility
- Fees
- No fee to settle early. A completion fee applies and is added to the loan.
- Security
- Unsecured
- Eligibility
- 2+ years trading generally expected; latest accounts and bank statements requested.
- Speed in full
- Decision in as little as 5 minutes; funds typically within 48 hours.
- About the rate
- Rates from 6.9% per year is a floor for the strongest applicants, not a typical rate.
- Amount
- Up to £25,000
- Term
- 1 to 5 years
- Rate
- 7.5% APRrepresentative
- Speed
- Weeks rather than days: it is an assessed government scheme, not instant lending.
Fees, security and eligibility
- Fees
- No application fee and no early repayment fee. Includes free mentoring.
- Security
- Unsecured
- Eligibility
- For businesses trading under 3 years (or pre-start). One loan per person, up to £25,000 each, subject to affordability.
- Speed in full
- Weeks rather than days: it is an assessed government scheme, not instant lending.
- About the rate
- A fixed 7.5% per year, the same for everyone, which is unusual: most business lending is priced on risk. The trade-off is the £25,000 cap and the assessment.
Start Up Loans is built for new businesses; the alternative lenders are shown with their own published trading requirements so you can see where the line falls.
