One of the biggest barriers to starting a company isn't the idea — it's the money to live and build while you turn that idea into something real. Equity investment through SEIS is one answer, but it's not always the right first step. Sometimes what you need is straightforward funding to get started — and that's where the British Business Bank's Start Up Loans scheme comes in.
What are Start Up Loans?
Start Up Loans are government-backed personal loans designed specifically for people starting or growing a business in the UK. The scheme is delivered by the British Business Bank and has supported tens of thousands of new businesses since it launched.
The fundamentals are straightforward: you can borrow between £500 and £25,000 as an individual, repayable over one to five years. If your business has multiple founders or partners, each person can apply for up to £25,000, with a maximum of £100,000 available per business.
The loans are unsecured, which means you don't need to put up your house, car, or any other assets as collateral. There are no arrangement fees. And every successful applicant gets 12 months of free business mentoring included — which, depending on your stage, might be as valuable as the money itself.
What do they cost?
The fixed interest rate for new applications from April 2026 is 7.5% per annum. Before April 2026, the rate was 6%. While this isn't free money, it's significantly cheaper than most commercial business loans for early-stage companies, and the fixed rate means your repayments are predictable from day one.
To put that in context: on a £10,000 loan repaid over three years at 7.5%, your monthly repayment would be around £311. That's a manageable cost for most founders, especially when the alternative is not starting at all.
Who's eligible?
The eligibility criteria are broader than most people expect:
- You must have the right to work in the UK
- Your business must have been trading for up to five years (the scheme was recently expanded from three years)
- The loan is available to sole traders, partnerships, and limited companies
- Your application is assessed on the viability of your business plan — not just your credit score
- You don't need an existing trading history to apply
That last point is important. Unlike most commercial lenders, the Start Up Loans scheme is designed for people who are genuinely at the beginning. If your business exists only on paper — or only in your head — you can still apply, as long as you have a credible plan for how you'd use the money.
What can you use the money for?
Start Up Loans can fund most legitimate business activities, including equipment, stock, marketing, website development, professional services, and working capital. Founders often use them to cover the costs of getting to their first product or their first customers — the exact stage where other funding is hardest to find.
There are a few exclusions. You can't use a Start Up Loan to repay existing debts, fund training or education courses, or invest in activities that don't form part of a sustainable business. But for the vast majority of early-stage ventures, the scheme covers what you need.
How to apply
The application process is more structured than a typical bank loan, but that's actually a strength — it forces you to think clearly about your business before you spend any money.
You'll need to prepare:
- A business plan — covering what your business does, who your customers are, how you'll make money, and why you'll succeed
- A 12-month cash flow forecast — showing expected income and expenditure month by month
- A personal survival budget — proving you can cover your own living costs during the early stages
- Three months of personal bank statements — for affordability assessment
- Proof of UK residency and identity
When you apply, you're paired with a dedicated business adviser who helps you through the process. This isn't a tick-box exercise — they'll challenge your plan, push you on your assumptions, and help you strengthen your application. At Akcela, we help founders prepare these materials as part of our incubation programme, so companies entering the process are already well-prepared.
Start Up Loans vs angel investment vs grants
For early-stage founders, there are broadly three funding paths — and they're not mutually exclusive.
Start Up Loans give you cash quickly, with no equity dilution. You keep 100% of your company. The trade-off is that it's debt — you'll repay it regardless of whether your business succeeds. Best for: covering early operating costs, building an MVP, getting to first revenue.
Angel investment via SEIS gives you larger sums (up to £250,000 under SEIS) with no repayment obligation. The trade-off is equity dilution — you're giving away a share of your company. Best for: product development, team building, scaling once you have traction.
Grants are free money with no repayment and no dilution. The trade-off is that they're highly competitive, often restrictive in how funds can be used, and slow to process. Best for: specific project funding, R&D, programmes like Innovate UK.
Many Akcela portfolio companies use a combination of all three. A Start Up Loan to cover the first few months, SEIS investment to fund product development, and grant funding for specific innovation projects. The key is sequencing them in the right order for your particular situation.
Second loans
If you've already had a Start Up Loan and repaid some of it, you may be eligible for a second loan. Your total Start Up Loan balance can be up to £25,000 at any time — so if your first loan was £15,000 and you've repaid £5,000, you could apply for a second loan of up to £15,000.
Second loans are available to businesses that have been trading for up to five years, which means the scheme can support you well beyond the initial startup phase.
Why this matters for Norfolk founders
Access to early-stage funding has historically been harder outside London. Angel networks are smaller, VC presence is limited, and the cost-of-living gap — while a benefit in many ways — means founders typically have smaller personal savings to draw on.
The Start Up Loans scheme levels that playing field. It's available nationwide, assessed on business plan quality rather than geography, and designed for exactly the kind of first-time, non-technical founders that Norfolk produces in large numbers.
Combined with Akcela's incubation programme (which provides free desk space, mentoring, and investor connections at no upfront cost) and the Future Tech Programme (funded workshops and structured support for early-stage founders across Norfolk and Suffolk), a Start Up Loan can be the final piece that makes full-time founding financially viable.
Getting started
If you're thinking about applying for a Start Up Loan, the official starting point is startuploans.co.uk. The application is free and the process is well-supported.
If you want help putting together your business plan and financial forecasts before you apply, get in touch with Akcela or apply to the incubation programme. We work with founders at exactly this stage — turning a strong idea into a structured, fundable business.
You can also learn more about SEIS investment for when you're ready to raise equity, explore what a business incubator does, or read about the Norwich startup community that Akcela is part of.
