All the way back in 2012, the government started a scheme that was intended to assist businesses in the UK with building their brand. The scheme provided loans to people who wanted to start a brand-new business which was based in the UK. The original scheme was only available to individuals who were over 18, but now, the age cap has been changed, and anybody who is over 18 is able to apply. It’s funded by the British Business Bank and helps over 10,000 entrepreneurs every single year. As such, if you are starting a business and need some help with funding, this start-up loan could be perfect.

What is a Start-Up Loan?

There are a number of different loans offered to businesses by the government. A start-up loan is where individuals and businesses alike can apply for different government loans to get their organisation off the ground and have all of the tools necessary for success. The start-up loans are completely unsecured, and there isn’t a fee that people have to pay upon completing the application process.

Not only that, but once you have been approved for a loan, the government will give you assistance in terms of running your business as you will be taught how to write a business plan and receive mentoring.

What are the Requirements to Apply for a Start-Up Business Loan?

In order to apply for a start-up business loan, there are a number of different criteria that an individual has to meet. These include the following:

  • The individual must be older than 18
  • The individual must be legally allowed to work within the UK
  • The individual must currently be living in the UK
  • The individual has to have a business plan in place, or they must have a business that has been trading for at least 6 – 12 months
  • The individual must have been denied a loan from a bank

What Are the Features of the Loan

Once you have been accepted and are able to claim a start-up loan, you and your business will have access to funds with the intention of them helping get your organisation off the ground. The loan features include the following:

  • Amount of loan: Anywhere from £500 – £25,000, depending on your businesses needs
  • Duration: 1 – 5 years
  • Interest rate: 6% every year (this interest rate is fixed)

How Do Businesses Successfully Apply for the Start-Up Loan?

It’s very straightforward to apply for a business loan once you are sure you can meet all of the above-referenced criteria. Simply follow the below steps:

  • Head over to the British Business Bank’s website and go onto their registering for a start-up loan page. Here you will be met with a survey which checks how eligible you are for the loan in question. Be sure that you have a business plan prepared; alternatively, ensure you have a cash flow forecast that you can submit. You’ll also need to make sure that you submit an application form too.
  • Afterwards, you will have your application looked at by one of the assessors who is going to be responsible for whether or not it will be approved or disapproved. There are a few different things that this assessor will look at as they give loans at their discretion. Some of the factors they’ll assess include your business plan, your capabilities as a business owner and your attitude,e. how serious you actually are about your business and how likely you are to succeed as a result.
  • Next, a business advisor will be in touch, and they will be responsible for gathering any and all other necessary information that they need to fully complete the application.
  • Once all of this information has been gathered, and your application is assessed, you’ll be notified of the decision (this means you will find out whether or not your application has been approved and what you are likely to receive). There is no set time on how long this decision takes – usually, it’s about a month, but they may well come back and request more information.
  • You will receive your loan and will be required to make monthly repayments of said loan over a fixed term.

What Different Things Are Checked Throughout the Process

As discussed above, assessors will check your business plan, capabilities and attitude when considering your application. Not only that, but once your application has been submitted, they will also likely check:

  • Your Credit History: Specifically, they will have a look at how well you have been keeping your credit commitments over the past six years. If you have any CCJs against you then you are unlikely to get approved for the loan. You can get help from experts if you are looking to improve your credit score, as this can assist with getting approved for short-term
  • Your Affordability: Your affordability means they will check whether you have disposable income which will mean you can make the necessary repayments. This will all be analysed carefully in order to ensure that you can afford the loan.
  • Whether You’re Likely to Succeed: Finally, there will be an assessment as to whether or not your business is likely to succeed. A business advisor will be responsible for making this decision, and in doing so, they will consider:
    • Whether or not the product/service you’re offering is in demand
    • Whether you have the abilities needed to run the kind of business you want

Do You Need a Start-Up Loan?

A lot of the time, businesses initially struggle purely because they don’t have the funds necessary to get them off the ground initially. If you find yourself in this position, then a start-up loan could help. There are criteria you need to meet to be eligible, and your application will be considered in great detail before being approved.

If you need help with funding for your business or would like further advice on loans that will aid your success, then be sure to contact Leading UK. We work with businesses in a variety of different industries and provide assistance on all of their money needs, whatever they are.