Since the scheme launched in 2012, the British Business Bank has lent over £1bn to more than 110,000 UK founders. The terms are deliberately friendly: a fixed rate, no early repayment penalty, no fees, and a free mentor for the first year. For first-time founders without trading history, it is the cheapest unsecured debt you can get.
Direct answer
Government-backed personal loans of £500–£25,000 at a fixed 6% APR with 12 months of free mentoring. The single most useful piece of debt available to UK founders — but it's a personal loan, not a business loan, and that distinction matters. Use the key facts, step list and official source links on this page to confirm the decision before you spend money or register anything.
- Loan amount
- £500–£25,000
- Interest rate
- 6% APR fixed
- Term
- 1–5 years
- Mentoring
- 12 months free
Section 01
Who can apply
- UK resident aged 18 or over.
- Have a UK-based business that has been trading for less than 36 months, or a clear plan to start one.
- Pass a personal credit check (CCJs, IVAs and recent bankruptcies are usually blockers).
- Up to 4 co-founders per business — each can apply for their own loan, max £100k per business in total.
- Can already be self-employed when you apply, provided the business is under 3 years old.
Section 02
The application step by step
- 01
Register online
Create an account on startuploans.co.uk and complete your personal eligibility profile. Takes 10 minutes.
- 02
Submit a business plan + cash flow forecast
Templates are provided. The plan needs to be specific — what you sell, to whom, at what price, with realistic monthly numbers for 12 months.
- 03
Personal survival budget
A monthly breakdown of your personal income and outgoings. The assessor uses this to check the loan is affordable on top of your living costs.
- 04
Credit check & assessor call
A delivery partner (Transmit Startups, x-Forces, Virgin Money etc.) reviews your application and calls you to discuss. They are looking for realism, not perfection.
- 05
Decision and offer
If approved, you get a formal loan agreement. Sign it, and funds are usually in your account within 5–10 working days.
- 06
First repayment
Begins 1 month after disbursal. You can overpay or settle early at any point with no penalty.
Section 03
What it really costs
On a £15,000 loan repaid over 5 years at 6% you'll pay roughly £290/month and around £2,400 in total interest. There are no fees, no arrangement charges and no penalty for repaying early — so the headline rate is also the all-in rate. By comparison, a typical credit-card cash advance is 24–28% APR plus a 3% fee, and unsecured commercial loans for under-3-year-old businesses usually start around 10–14%.
Section 04
The catch nobody warns you about
It is a personal loan. If your limited company fails, the loan does not die with it — you are personally liable for the remaining balance. Treat the borrowing decision the same way you would treat any personal debt: would you take it on if you knew the business would not work? If the answer is no, borrow less.
Section 05
How to maximise your chance of approval
- Use the cash for clearly productive purchases (equipment, stock, marketing, working capital). 'Founder salary' and 'cover personal bills' are red flags.
- Be specific in your forecast — assessors see hundreds, and round numbers (£10,000 marketing, £5,000 'other') look like guesses.
- Show some skin in the game. Founders who have already invested some of their own money are taken more seriously.
- Apply through a delivery partner that specialises in your sector if possible (x-Forces for ex-military, BSEEN for student founders, etc.).
- Fix obvious credit-file issues first — register on the electoral roll, settle any small defaults, and check your file via Experian/ClearScore.
Section 06
Common rejection reasons
- Unrealistic forecasts (overstating revenue, ignoring tax/VAT).
- Personal credit issues — CCJs, undischarged IVAs, recent missed payments.
- Loan being used for refinancing existing personal debt.
- Insufficient explanation of how the money will be repaid if the business is slower to take off than forecast.
- Business model that breaches scheme rules (gambling, weapons, adult content, multi-level marketing).
Section 07
After you've got the loan
Your delivery partner assigns you a mentor for 12 months — a free, experienced sounding board. Use it. Mentors are usually ex-founders or sector specialists and the structured check-ins are one of the most valuable parts of the scheme. Mentees are statistically twice as likely to still be trading after 3 years as non-mentees.
Partner offers
Before you go — claim your reader offers
Two offers we recommend to every UK founder. Codes are exclusive to readers of this guide.
Business bank account
Reader offerTide Business Account
£200 free cash
£75 when you complete £100 of card transactions within 30 days, plus a further £125 when you deposit £5,000 within 7 days. No credit check, open in 5 minutes.
REFER200Business credit card
Reader offerCapital on Tap business credit card
7,500 free points
Get 7,500 points (worth £75) when you complete your first card transaction within 30 days. 1% uncapped cashback. Up to £250k credit limit.
SETTINGUP18+, UK residents only. Offers are subject to each provider's terms. Tide: £75 paid after completing £100 of card transactions within 30 days of opening, plus a further £125 paid after depositing £5,000 within 7 days (total £200, code REFER200). Capital on Tap: 7,500 points (≈ £75) after first card transaction within 30 days; credit subject to status. We may receive a commission if you sign up — it doesn't change the offer to you.
Common questions