Business Loan for New Businesses in the UK

Starting a business can be challenging, especially because you need large startup capital. It is even more challenging because many small business lenders often require that small businesses provide security for a loan. Many business lenders require a business to have been trading for at least 1 year and also have a minimum annual turnover, which new businesses may not qualify for. However, you can still get a business loan in the UK for a new business.

Startup Business Loans UK

  • Startup business loans can be either secured or unsecured business loans. Most business lenders will require your business to have been trading for some time and to have a minimum turnover.
  • Most business loans for small businesses usually have a fixed interest rate. Interest rates normally depend on individual circumstances like how much you are borrowing, repayment period and your business annual turnover.
  • You can get a business loan for your new business through Government loans and grants, peer-to-peer lending platforms, banks, crowdfunding, or bad credit loans in UK.

Type of Startup Business Loans in the UK

There are many types of startup loans available for new businesses in the UK. They include:

  • Secured Business Loans. A business would need to provide an asset as a security for the loan. Secured business loans after often cheaper since the lender’s risk is low.
  • Unsecured business loan. A business is not obligated to provide security or an asset to secure a loan. The lender’s risk is usually high making the unsecured loan expensive.
  • Peer to Peer Lending. Peer-to-peer business loans are loans provided by platforms such as Funding Circle that connect startups to multiple investors who lend businesses money. A business doesn’t need to give shares or equity for these kinds of loans.
  • Crowdfunding. You can raise money for your business startup through crowdfunding platforms like Kickstarter and Indiegogo.

You can get a business loan for a new business from online lenders, the government, banks and investors. The following are some of the startup loans you can apply for in the UK.

UK Government Startup Loans is a government-backed startup loan for new businesses. Businesses can qualify for loans ranging between £500 and £25,000. You can use the loan to start or boost your business. It is not a business loan as such but it is unsecured personal loan that helps individuals boost and grow their businesses. Apart from getting the loan, you will also benefit from 12 months of free mentoring and get help in writing a business plan.

How to Qualify for UK Government Startup Loans

To qualify, you must meet the following conditions:

  • You live in the UK
  • You are 18 or over
  • You have (or plan to start) a UK-based business that’s been fully trading for less than 24 months

UK Government Startup Loan Fees

Start Up Loans are government-backed and charge a fixed interest rate of 6% per year. You can repay the loan over a period of 1 to 5 years. There’s no application fee and no early repayment fee.

SME Loans

two people sitting during day

SME Loans is a business loan broker for startups in the UK. You can get a startup business loan of between £1,000 and £500,000. You can repay the loan within a period of between 1 and 3 years. You can use the loan to start a business or boost an existing business. SME Loans provides unsecured business loan with competitive interest rates.

How to Qualify for SME Loans

The company connects you to different types of lenders they work with. Criteria for qualification will depend on the requirements of the suitable lender they find for you. However, SME Loans provide an online form and risk assessment technology to speed up the application process.

SME Loans Fees

Being a loan broker, SME Loans do not charge any fees for their services. You get a quote free of charge. The company only receives a commission when it successfully introduces you to a business loan provider. The commission has no impact of your loan fees.

Virgin StartUp Loan

Virgin StartUp Loan is a business loan for new businesses in the UK. Virgin StartUp helps businesses to get a loan of between £500 and £25,000. Apart from business funding, successful applicants also benefit from business support.

How to Qualify for Virgin StartUp Loan

To qualify for the loan,

  • Your business must not be older than 2 years
  • You must have an EU passport or a valid UK visa

Virgin StartUp Loan Fees

The loans usually have an interest rate of 6 percent with a loan term limit of between one year and five years. The lender does not charge early repayment penalties.

NatWest Rapid Cash

invoice finance for small business

NatWest Rapid Cash is an ideal platform for invoice finance for new businesses that have been operating for six months. NatWest provides a wide range of business loans ranging from small, large, short and long-term loans. The repayment terms can even be up to 10 years but security is required. You can get a loan of between £1,000 and £50,000. You can apply for the loan through NatWest website.

How to Qualify for NatWest Rapid Cash

To qualify for the loan, your business must be:

  • A trading partnership, a Limited liability partnership, or a Limited Company

NatWest Rapid Cash Fees

The interest rate is fixed and depends on your circumstances and loan amount. You can use a slider on their website and see how much you will repay. There are no early repayment charges.

StartUp Loans

StartUp Loans is a business loan for new businesses. You can borrow up to £25,000. It is ideal for people who are looking for funding for a start-up. Apart from funding, businesses also benefit from business plan writing, 12 months of free mentoring and exclusive discounts.

How to Qualify for StartUp Loans

To qualify for StartUp loan:

  • Your business must be based in the UK
  • You must have a permit to work in the UK
  • You must be 18 years old and above
  • Pass credit checks

StartUp Loan Fees

StartUp Loans charge a 6% interest rate per annum. The interest rate is fixed and the repayment term is between 1 to 5 years. There are no arrangement fees or early repayment fees.

Summary of Business Loans for New Business in the UK

Finding a business loan for a startup can be challenging. However, you can use the above business lenders to get a startup loan. Most of these business loans are unsecured and many businesses can easily qualify. The interest rates for some lenders depend on individual circumstances like the amount you are borrowing and your business turnover.

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