Starting a new business is an exciting but undeniably daunting time. One of the main obstacles that many budding entrepreneurs struggle with is securing funding.
It can take a long time to save enough capital to start a business and unforeseen costs are always a possibility. Whilst there are a plethora of financing options out there, high interest rates can prove to be yet another deterrent. Nevertheless, government backed schemes such as the Start Up Loan, offer those looking to start a new venture the means to secure capital with lower, more manageable interest rates.
The Start Up Loan is a government backed personal loan that is available to those looking to start a small business in the UK. The loan is unsecured, meaning no assets or guarantors need to be put forward to support the application. Applicants can borrow up to £25,000 and all owners or partners in the business can individually apply for the same amount, with a maximum of £100,000 available per business.
Unlike government grants, the loan is repayable and must be repaid in full over an agreed term of one to five years. However, unlike most personal or business loans from banks, the Start Up loan has a fixed interest rate of 6% per annum. Moreover, the government offer free application guidance and post-loan mentoring to support the future success of those applying for funding.
To be eligible to apply you must fit the following criteria:
- You’re 18 years of age or older
- You’re a current UK resident
- You’re starting a new business or have been trading for up to 36 months
- You’re unable to secure finance from other sources (self-declaration is ok)
- Your business is based in the UK
- You have the right to work in the UK
- Your business type and loan purpose is eligible under terms of the scheme
- You pass the necessary credit checks and you can afford to repay the loan
Over 360,000 new businesses start up in the UK each year. Whilst not all of those businesses survive, many succeed in operating successfully and profitably. By utilising government backed schemes such as the Start Up Loan, new businesses can make the most out of manageable interest rates and free support to give their business the best head start possible.