Best Start-Up Business Loans

In this guide, we cover the top start-up business loans in the UK…

Updated: October 23, 2023

Start-up loans may be possible if your company is under 24 months old. Use it for business-related expenses including equipment, setup, recruiting, training and more.

It can be difficult for companies with less than a few months of trade experience to become worthy of receiving loans from conventional financial institutions or specialised business financing organisations (the minimum is normally between 6–12 months).

Capital on Tap Business Credit Card

Capital on Tap Business Credit Card
Credit Limit
Up to £250,000
Representative % APR (variable)
35.15% APR
  • Up to 42 days interest-free.
  • Uncapped 1% cashback with no annual fee.
  • Unlimited free company cards.

Representative Example – If you spend £1,200 at a purchase interest rate of 35.15% p.a. (variable) your representative APR will be 35.15% APR (variable). Your APR and credit limit may vary depending on your circumstances.

So if you're a startup in need of funding and can only afford to do so by taking on debt rather than selling investors a stake in your company, you'll have fewer options at your disposal than larger companies. The following are some possibilities to think about.

In this UK guide, we review the best start-up business loans today.

Best UK Start-Up Business Loans in 2023: The Full List

1. Tide★★★★★Click Here
2. Capital on Tap★★★★★Click Here
3. Fleximize★★★★★Click Here
4. British Business Bank★★★★★Click Here
5. UK Government★★★★★Click Here
6. Clydesdale Enterprise Finance★★★★★Click Here
7. Virgin Money★★★★Click Here
8. ClearFunder★★★★Click Here
9. Lloyds Bank★★★★Click Here
10. Royal Bank of Scotland★★★★Click Here
11. Yorkshire Bank★★★★★Click Here
12. CubeFunder★★★★★Click Here

1. Tide — Top Start-Up Business Loans Overall

Loan terms for Tide's business loans range from a month up to 72 months, with amounts of £500 to £15 million.

Tide was launched in 2015 and is mainly a business banking tool for SMBs to help them save time and money. But it also gives access to a number of business loans and cash management resources.

In addition, Cashflow Insights is Tide's platform to which you may link your company bank account.

Cashflow Insights leverages open banking to analyse your financial situation, revealing how much you can borrow and which financing choices are suitable for your company.

How about customer reviews? Overall, more than 64,000 users have given Tide a 4.8 rating on the App Store, while about 15,500 users have given it a 3.5 rating on Google Play. Tide has received a rating of Great on the customer review portal Trustpilot, with 4.3 out of 5 stars from more than 16,000. 

Overall, Trustpilot reviews for Tide are mostly positive, with consumers praising the company's speed and ease of use. However, some customers have voiced frustration at the company's customer care response times.

How to Get

  • Tide can integrate with your company's system.
  • Uses open banking to determine your loan eligibility before you apply.
  • Your credit score will not be affected by using checks.
  • After you have established communication, you may research your credit choices and submit an application.
  • In order to determine your creditworthiness, you must first get a credit score.
  • You must provide basic company data, such as minimum trading.
  • To calculate net operating income, you'll need yearly sales.
  • Mention any possible collateral.
  • Discuss your current ratio of debt to available credit.

2. Capital on Tap — Popular Small Start-Up Business Loans

Around one billion pounds worth of loans have been made by Capital on Tap to small companies in the United Kingdom. For a non-traditional lender, this is a very large sum of money and a strong indicator of its reliability.

Capital on Tap is redefining how quickly applications may be processed by just requiring 2 minutes to complete the form, making immediate decisions, and offering money in as little as 10 minutes.

Capital on Tap has established itself as a supporter of innovative ideas and a provider of excellent customer service, having backed over 65,000 enterprises so far. Its tiny size means that it understands what startups actually need.

How to Get

  • Take out a loan of up to £50,000.
  • There is minimal information on their site about eligibility, such as a required minimum trading history or yearly turnover (although eligibility may be decided on a case-by-case basis).
  • Choices in how much and how often you pay back.
  • There are never any hidden charges, either monthly or yearly.
  • Take no more than 2 minutes to complete the application and find the results as soon as possible.
  • There is a potential for a ten-minute cash transfer time following application.

3. Fleximize — Strong Start-Up Business Loans 

The United Kingdom-based firm Fleximize helps startups and growing enterprises access capital. Fleximize makes it easy to apply for a loan despite how challenging it might be to be approved. In fact, the time between applying and receiving cash might be as little as 48 hours.

This level of service demonstrates a deep familiarity with the client's needs; most startups face time-sensitive issues that need prompt attention.

While most small company loans on the market need at least a year of trade history before approving an applicant, Fleximize is especially inviting to startups.

Since interest rate estimates are tailored to each business, the application and repayment processes are adaptable (with no prepayment penalties). A growing startup that has a track record of making its loan payments on schedule will have more access to capital and more favourable repayment arrangements.

How to Get

  • You can get a loan of up to £500,000 (or the equivalent of two months' worth of income) which can be topped up after successful repayments.
  • As per the name, repayment terms are flexible, ranging from one month to twenty-four months (or 48 months for secured loans).
  • The minimum monthly rate is just 1.5 per cent.
  • There are no prepayment charges or fees.
  • Help and direction from an assigned account executive.
  • A minimum of £5,000 in annual sales and a minimum of 6 months in business are requirements.
  • Having just six months of business trading experience is sufficient.
  • Overpaying or paying off the loan early is permitted without additional fees.

4. British Business Bank — Trusted Start-Up Business Loans

To launch a new venture before they become big enough to be publicly traded, money is often the deciding factor. To help new firms get off to a good start, the British Business Bank has partnered with the Start-Up Loans Company to provide loans of up to £25,000, in addition to mentorship and coaching.

Contrary to popular belief, a “Start-Up Loan” is not a loan for a company but rather an unsecured personal loan. If your application is accepted, not only will you get financing, but you will also receive up to 12 months of free mentorship at no cost to you.

Having a solid business strategy in place is crucial when launching a company. Your organization's objectives, strategy, marketing and sales plans, and financial projections may all be found in the free business plan template. You may get a head start on your strategy by downloading our free template.

The Open University and Start-Up Loans have collaborated to provide a series of helpful, no-cost courses on various business-related topics. They aim to educate new business owners on the fundamentals of operating a company and cover topics such as accounting, finance, leadership, and management.

The British Business Bank provides interest-free loans to new firms with no prior track record of making a profit, and their rate of 6% per year is among the lowest we could find (fixed). Loans of £500 to £25,000 are available to new firms, with payback periods of up to five years.

Moreover, all selected candidates will receive a free year of mentorship. The typical borrower borrows a little over £7,200. The loan may be paid off early without penalty, and a cosigner isn't needed to secure it.

How to Get

  • Annual interest rate is set at 6%.
  • No need for a personal guarantee.
  • The application process is free and no charges for paying off your loan early.
  • Having access to helpful business mentors.
  • Only open to companies that have been operating for less than three years.
  • A maximum of £25,000 may be borrowed.
  • Other questions to ask: Are you above the age of 18? Do you have a plan for a new company? Is London going to be where you set up shop? Where exactly in the UK do you call home? Is your company's history in operation shorter than three years? Have you started your business in the last few years but been operating for less than five years?

5. UK Government — Trusted Start-Up Business Loans 

The government of the United Kingdom is extending an opportunity for financing with a repayment schedule to new firms in the United Kingdom.

So, only businesses with a short operating history (less than two years) will qualify for the loan.

In addition to the loan, the government will provide the firm with free coaching for a period of 12 months, which may make a huge impact, especially for individuals who lack trade expertise.

The government will also provide additional tools, such as templates and guidance, that may be useful in your pursuit of funds. The fact that it comes from the government is the loan's biggest perk.

Hence, you can be certain that no one is attempting to pull the wool over your eyes; all loan terms are completely open and straightforward to grasp. Interest rates and fees are clearly stated as 6% and won't change. 

Moreover, the application procedure is often one of the most difficult parts of securing money. Here, however, the lender provides assistance throughout the application process. Excellent for startups.

How to Get

  • To help new businesses get off the ground, the government offers loans of between £500 to £25,000.
  • Unguaranteed, individual loans (unlike the Government Business Loan).
  • Annual interest is set at 6%.
  • Enjoy flexible payment terms between 1 and 5 years.
  • There are no charges for either applying or prepaying.
  • You need to be a company headquartered in the United Kingdom that has been open for less than two years.

6. Clydesdale Enterprise Finance — Best Start-Up Business Loans for Mid-to-Large Firms

For companies with a future chance of getting an IPO, as Monzo may soon, this loans provider gives funding for the early-middle growing phase.

Yorkshire Bank's parent company also controls the much larger commercial bank Clydesdale. If you get a loan from a major high street bank, you'll have the option of going in person to the branch for meetings and other business as needed. Naturally, this is not achievable with online lenders since you must call a helpline to get the ball rolling.

Due to the backing of the British government, this loan differs somewhat from the others. The UK government's Department for Business, Energy, and Industrial Strategy has guaranteed 75% of the loan. So, the loan's principal amount is subject to a government premium of 2%. (plus an arrangement fee).

Any new firm may apply for this money, even if they “have no security or lack appropriate security”, meaning they only have a business idea. Companies involved in government work, the military, insurance, mining, or social services are not eligible for participation.

How to Get

  • Loan amounts might range from £25,000 up to £1.2 million.
  • Choose a repayment period that works for you, often between 1–10 years.
  • Financed by the British government.
  • Must have yearly revenue of less than £41m.

7. Virgin Money — Top Start-Up Business Loans

The value of receiving a Virgin Start-Up Loan goes beyond the dollar amount. Virgin realises this investment may do more for your business than just tide you through.

Virgin offers unusual levels of assistance for a lender, including mentors and a business hotline, along with the funding. Virgin StartUp also facilitates expert meetings and offers marketing and advertising possibilities (being featured on its website, for example).

The fact that this loan is intended just for start-ups is perhaps its most appealing feature. In fact, you need not even have begun trading at this point. The average loan amount from Virgin is £10,000, so it's not like they're throwing away little change.

How to Get

  • Get a loan of £500 to £25,000 for each founder.
  • Money may be borrowed for 1–5 years at a fixed rate of 6% each year.
  • A special hotline and advice service for companies.
  • Choose a seasoned professional to advise you and help your company succeed.
  • Get exclusive discounts and deals from the Virgin Group.
  • The company must be in its infancy or have operated for less than two years.

8. ClearFunder — Established Start-Up Business Loans

ClearFunder is unique in that it caters to the needs of each company rather than setting rigid standards, from micro-investments to sizeable small business credit.

All that is required is that the private corporation is headquartered in either England or Wales and be free from any bankruptcy or redundancy proceedings. Everyone, regardless of credit score, may apply, however, it will be necessary to demonstrate that you can afford the payments.

ClearFunder asserts to simplify and clarify business financing. The corporate vehicle purchase, business growth, restructuring, cash flow, equipment, and employee advancement are all eligible for loans.

ClearFunder, operating out of Windsor, offers both rapid online quotations and adjustable payback arrangements. “All conditions are considered” is a promise made on their website.

How to Get

  • All conditions considered, borrow between £10,000 & £100,000 for your business.
  • Requests for annual percentage rates may be fulfilled.
  • Day-to-day repayment flexibility allows you to pay more when funds are available.
  • A loan may be used for whatever you'd want.
  • A one-time charge paid at the time the loan is originated.
  • There will be no penalties for prepayment.
  • Each unique set of circumstances is carefully examined.

9. Lloyds Bank — Best Fixed-Rate Start-Up Business Loans

Lloyd’s Business Loans might be useful whether you want to grow, purchase new equipment, deal with commodity resources, or just better manage your company's cash flow.

But, despite the loan's modest conditions, it may be challenging for a new business to get. No prior trading experience is necessary, that much is true. But, if the firm is less than two years old, this will undoubtedly be a barrier, as it is for many other large banks.

But, if you are willing to invest the effort into what may be a tedious application process, it might be worthwhile. After all, if accepted, you will have access to one of the greatest small business loans available.

How to Get

  • You may get a loan for your new business of between £1,000 and £50,000.
  • An attractively low, fixed APR of 9.3 per cent.
  • Borrowers who need a loan of less than £25,000 won't have to pay an arrangement charge.
  • Choose a length of service between one and ten years.
  • There are no prepayment penalties and fixed monthly payments.
  • Lloyds is a commercial banking heavyweight, which can provide a competitive interest rate of 9.3 per cent.

10. Royal Bank of Scotland — Top Start-Up Business Loans

Another large commercial bank, RBS, has developed a product specifically for new businesses seeking funding, perhaps once running out of the ability to invest their own money. Without a need for a minimum amount of time in business, RBS's Small Business Loan is a good option for new businesses.

The amended material on RBS's website also shows that the previous requirement of having revenue of £2 million or less to utilise a Small Business Loan has been removed.

The amended material on RBS's website also shows that the previous requirement of having revenue of £2 million or less to utilise a Small Business Loan has been removed.

To begin with, it's fantastic that RBS provides access to a business financing product for so many people. There is a little amount of money available, reflecting the fact that it is so easily accessible.

But, £50,000 might be enough for many new businesses to get off the ground. More than half of the company's borrowers may anticipate an annual percentage rate (APR) of 12.49 per cent or less from this loan programme.

How to Get

  • You may get a loan of up to £50,000.
  • Loan periods might be anything from one to ten years.
  • There are no service or interest charges associated with making a repayment.
  • Personal assurances from directors may be necessary.
  • There is no need for a set length of time in operation, and RBS has recently removed its previous requirement that applicants' annual revenue by at least £2 million.

11. Yorkshire Bank — Large Start-Up Business Loans

A northern banking behemoth and Clydesdale Bank offshoot, Yorkshire Bank is a household name. At this time, they are advertising a loan with an attractively low annual percentage rate (APR), as well as clear and uncomplicated repayment terms.

This is often the domain of huge banks, but Yorkshire gives it a unique spin. You may apply for this loan in as little as 10 minutes online and get a decision in as little as 48 hours, just like with any alternative lender.

The yearly revenue requirement of £5 million is the program's major downside, since it may exclude many new and small businesses not yet big enough to get an IPO and leverage shareholder support.

How to Get

  • Take out a loan of £100,000–£150,000 for 12–60 months.
  • Ten minutes is all it takes to complete the application, and you'll hear back about your status in under two days.
  • No penalties for paying off your loan early or in a lump amount.
  • Must be at least 18 months of financial data for the firm.
  • Yorkshire Bank's loan is excellent since it combines the greatest features of both alternative and conventional financing options.

12. CubeFunder — Sound Start-Up Business Loans for SMBs

Located in the United Kingdom, CubeFunder is an innovative business loan prioritising personalised service. CubeFunder simplifies the application procedure into four easy stages and aspires to have fewer fees and regulations than its competitors.

Alternatively, CubeFunder provides large loans to relatively new businesses, if they can prove a monthly turnover of £4,000 or more and are willing to overlook a poor credit history.

Whilst the application procedure only takes a few days and the repayment amount is a set dollar amount rather than an annual percentage rate (APR), the total cost is difficult to determine.

How to Get

  • To borrow between £5,000 and £100,000, please go here.
  • A one-time payment with no interest added.
  • Path to financing is simple and quick to follow.
  • Minimum credit score required is low, and businesses need just a three-month track record of revenue to qualify.
  • One must bring in at least £4,000 per month to qualify.

Best Start-Up Business Loans — Buying Guide

Many companies provide startup firms with capital for their first two years of operation.

Although a company credit check is part of the application process, they will often work with companies of varying credit ratings and lenders take a lot of things into account when issuing loans.

Typically, what do you need to get a loan to launch your business? Your company must satisfy the following requirements at a minimum to be considered for a startup loan:

  • 📘 To qualify for a startup loan, your company must have been operating for at least 6 months, ideally between 12/24 months. (Registration in the UK is mandatory.)
  • 📘 To legally own a company, you must be at least 18 years old. 
  • 📘 Each company's primary owner must also be over eighteen and the company itself must be in and actively doing business inside the UK.

★ 1. How do commercial loans function?

Commercial loans come in a wide variety of forms, each with its own set of features and benefits. The development level of your company is one factor to consider when deciding on a format.

Companies, like people, have credit histories and scores. If they are strong, getting financing shouldn't be too difficult. There won't be much of a credit history for a brand-new company, so a lender will likely want to start slow or want some kind of collateral.

“Start-up” loans are used to fund the creation of a new firm or the expansion of an existing one. They are normally provided for durations of one to five years and may be government-backed.

Companies that have been around for a while and have proven themselves financially have more lending choices available to them. These options are in addition to others, such as business credit cards and factoring.

Financial aid for businesses: the good and the bad

If you need access to a big sum of money for a longer time and at a lower interest rate than a business credit card, a business loan may be the way to go. Nevertheless, this isn’t the most flexible alternative and it may often be challenging to qualify for the qualifying criterion.

★ 2. Pros 

✔️ Substantial sums may be borrowed and the funds delivered all at once, making this kind of financing ideal for one-time expenditures like corporate expansion or personnel purchases.

✔️ The interest rate and your monthly payment amount will be clearly stated from the outset.

✔️ Cheaper rates than a business credit card (subject to status) (subject to status).

✔️ Loan terms are favourable in the long run. There are a few loan companies that will extend their repayment terms up to 25 years.

★ 3. Cons

❌ Not very adaptable; you should know how much you need to borrow before applying.

❌ It's possible that the required minimum loan amount is more than the amount you'll really need.

❌ Possible prepayment penalties.

❌ To qualify for a loan from some financial institutions, applicants must meet stringent requirements about annual income, credit history, and the nature of their firm.

❌ Collateral and a personal guarantee may be needed to get a loan.

❌ If you're having trouble making ends meet, you can do better.

❌ However, not all lenders are honest about their interest rates right away.

Making Good Use of Popular Start-Up Business Loans

A loan for a new company venture is like a shot of adrenaline that may help it take off and succeed. Expenses in the early phases of a startup are significant.

The following are examples of potential uses for the funds:

Startup Capital & Expenses

Establishing a company takes time and money, from early planning to paying employees and stocking shelves with products to meet demand. It's common for a company's initial few months in operation to be the most trying. When first starting, it might be difficult to maintain consistent operations without access to outside capital

Your premises are also one of the most expensive parts of getting a new business up and running. When starting a company, one of the most challenging aspects is finding a suitable location to lease or buy.

Getting The Word Out

Public relations and marketing are essential for every successful organisation. This is especially important for newer firms that are still building their clientele. With these funds, you may establish and publicise your brand and roll out promotional efforts.

Online Storefront

Building a consumer base and increasing brand awareness requires an effective website.

Building a professionally-looking, technologically advanced website might be prohibitively expensive if you don't have access to a web developer, which is another reason why company financing is useful.

In this day and age, more than half of all searches are performed on mobile devices, with an increasing amount of emerging market buying power.

Staffing Needs

Your company will eventually reach a point where it needs more staff. Investing in new team members might be costly, but putting it off until it's too late can have a devastating effect on your company's performance.


You should exercise caution if you plan on borrowing money. Getting a large sum of money for your company may be thrilling and terrifying. Use your loan wisely and efficiently to avoid the pitfalls of wasteful expenditure.

If feasible, keep your company's money in a separate account and only move it over to your main business account when absolutely necessary. 

Always try to have a good relationship with your lender.

If you ever run into trouble meeting a repayment date, keeping an open channel of communication will keep things amicable between you and your lender. You may avoid being late or missing payment deadlines by setting up automated payments.

Typically, getting into debt makes the most logical sense when it builds a sure asset like a quality home mortgage in a good area. 

Top Start-Up Business Loans: Where to Look?

Banks and other conventional lenders aren't the only options for entrepreneurs seeking seed capital. Online lenders and credit brokers are two more sources. Lenders may hesitate to provide capital to new enterprises due to the ‘greater risk' they pose.

Your approval odds will reduce if you have a short trading experience and can't show substantial capital or collateral. Startups now have more choices than ever because of the proliferation of alternative finance providers.

New enterprise financing is available from these streams:

  • Online unsecured credit providers
  • Governmental
  • Banks
  • Angel investors
  • Crowdfunding 
  • Merchant cash advance
  • Business Credit Cards 

They work well for startups since they can borrow smaller sums of money loadable onto a debit card without the need to put up collateral. Loans not requiring principal repayment upon default are known as “unsecured”.

The lender may demand security in the form of ownership stakes in the company. Although unsecured start-up company loans are considered less hazardous, they might come with somewhat higher interest costs and shorter payback periods because of this.

★ 1. Online Lenders

Credit brokers and online lenders offer rapid and easy access to capital for businesses, particularly startups.

Options and versatility are open to new ventures, and some lenders even provide financing to companies with poor credit histories.

Due to the convenience of applying online, the approval procedure takes only 24 hours, while traditional methods of obtaining financing from institutions like banks or the government can take weeks.

In addition, the costs and terms of loans offered by internet lenders are typically very easy to understand. In this way, business owners can borrow money with full knowledge of the interest rate they will be charged and the exact date when payments are due.

You can keep track of your bills and repayments easier with the help of email and text message reminders offered by many lenders.

  • High levels of agreement
  • Inviting people of all credit ratings
  • Instant payouts

★ 2. Governmental Lenders

Traditional lenders, such as banks, have dominated the business finance industry for decades. And for new enterprises, it might be especially difficult to obtain finance in the traditional sense.

This is mainly because modern banks place a premium on large corporate borrowing and thus subject applicants to stringent application processes and severe lending requirements with low acceptance rates.

Bank applications can be time-consuming; even after you've submitted all the required paperwork, you may need to meet with a representative in person to clarify the details. It may take a few weeks or months before you hear back, and much longer for the money to show up in your account.

Therefore, while it's true that banks are more likely to lend startups a larger sum of money, these businesses typically run into trouble doing so since their business concepts and sales records are less than stellar.

  • High standards for loan approval
  • Need a high credit rating to apply
  • Compensation is issued on a weekly, monthly, or quarterly basis.

★ 3. Merchant Cash Advance

A merchant cash advance is unlike a bank loan in that you don't have to worry about your payments increasing or decreasing based on your income.

These interest-free advances are based on your startup's projected earnings from debit and credit card sales in the near future. This cutting-edge service is available to new companies that can provide four months of bank and credit card records.

  • Get £5k-£500k
  • You get to keep all of the money made from direct cash transactions.
  • No hidden costs, all-inclusive pricing

★ 4. Business Credit Cards

If cash is needed, you might check into business credit cards as a possible funding option.

Rather than a long-term financing option, they are often utilised for a one-off emergency. Another perk of business credit cards is that they are excellent for companies of any size, even startups with just a few employees.

Although many new businesses lack an established credit history or score, a business credit card may be used to establish one.

★ 5. Angel Investors

Angel investors are wealthy people who are willing to risk their capital outside of bog-standard mutual fund ventures, opting for aggressive avenues to reap the rewards of a promising business venture.

Investment capital is only one of the many ways that angel investors may help businesses get off the ground; they can also provide vital ideas and guidance. While Angel Investors may be useful, you should be aware of the following before committing to this kind of funding:

  • The investor receives no repayment of the funds provided, but in exchange receives a stake in your company and a cut of your future profits. 
  • Angel investors are known for their involvement and desire to have a say in all matters pertaining to the business they have funded.

★ 6. Banks

True, banks specifically provide financing for companies, but new ventures have difficulty getting loans since they pose the most risk to the lender. Startups have difficulty getting loans from conventional lenders since they don't yet have a proven track record, solid management, or a sizable customer base.

Several banks provide business loans, but only if you can put up collateral.

If your company fails to make its loan payments as agreed, the lender might “foreclose” on the collateral to recover its losses. To recoup the income they would have earned from you, conventional lenders often impose penalties for prepayment.

★ 7. Crowdfunding/Sourcing

The popularity of fundraising using crowdfunding is increasing significantly. Crowdfunding is a kind of financing in which a firm receives monetary contributions from a large number of individuals. The money may be used for debt, equity, or a return.

Debt Crowdfunding

Debt-based crowdfunding, also known as peer-to-peer lending, is a kind of financing that is comparable to traditional bank loans but in which borrowers borrow money from a large number of individuals rather than a single institution. The creditworthiness of a company is determined via the use of a P2P lending platform, after which loans are made to the company.

Marketplace lending platforms connect lenders with borrowers, and investors set the interest rate. Investors get interest payments from the borrowing company in exchange for their capital, but they receive neither a tangible product nor ownership in the company. Crowdfunding via debt might expose firms to far more danger than traditional company loans:

  • Interest rates on P2P loans are often much higher than those offered by traditional financial institutions.
  • Several debt-based platforms, in exchange for using their services, charge exorbitant membership fees.
  • It may be difficult to get finance for a new business if you have a low credit score, and a rejection letter can hurt your standing even more.

Stocks Crowdfunding

Investors put their money into a startup in return for equity stakes. Investing in a firm and becoming a shareholder gives the investor a stake in the business and the potential for financial gain.

Before equity crowdfunding platforms, only the rich and business angels had access to this market; today, anybody may invest. While equity crowdfunding has certain benefits, it also has some drawbacks:

  • Almost all equity crowdfunding platforms also tack on success fees or subscription fees when users are successfully paired with investors and get funds.
  • It may take a while to gather enough money from investors.
  • You will have to give up some control of the business.
  • Crowdfunding promises future rewards

With this kind of crowdsourcing, people make tiny monetary contributions to a company in exchange for perks.

To raise capital for your company, you must make a public pitch where users would provide financial support in exchange for goods or services, such as handcrafted goods, thank you cards, etc.

Artistic Crowdfunding

Startups in artistic sectors interested in doing market tests with their goods might benefit greatly from using rewards crowdfunding. On the other hand, it has its risks:

  • If you don't get enough investors to back your project, you'll have to give up the money you've raised.
  • You can only raise a limited sum since you depend on people's generosity.
  • Without a patent, your company's innovations may easily be stolen by rivals.

Key Factors Affecting Acceptance and APR

World Events

Did banks offer business loans for new ventures during COVID-19 and what is the landscape today? It may be challenging to obtain a start-up business loan from some conventional lenders in light of the current economic scenario.

Consider our COVID-19 guide to sources of financing if you run a startup and have had trouble getting a business start-up loan in the UK. It entails not only the government's existing financial solutions for new businesses but also viable alternatives.

Credit and Assets

How much do interest rates often run on loans for new businesses without VC-backing or shareholders with dividends? Like any loan or line of credit, the APR offered on a startup loan will change based on your creditworthiness and the financial institution you choose.

Also, the interest rate can be affected by the company's monthly sales volume, credit history, and how long it has been in business. As a result, the interest rate on a business startup loan is notoriously difficult to predict.

Don't commit to anything until you find out the annual percentage rate (APR) from the lender you're matched with.

Best Start-Up Business Loans — Summary

One adage to debt is that it’s fine if you’re using it to invest in a sure asset like quality homeownership. The house of price will never fall to zero. But with around half of businesses, according to some popular studies, failing after five years, it’s a question you will need to wrestle with carefully. 

We hope this guide has been useful. As a last reminder of our top five startup business loans:

  • Tide
  • Capital on Tap
  • Fleximize
  • British Business Bank
  • UK Government

Related Guides:

Top Start-Up Business Loans: FAQs

Can I get a start-up business loan during COVID-19?

What is the interest rate on start-up business loans?

Where can I get a good start-up loan in the UK?

How do government startup loans work?

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Best UK Loans for Self-Employed People
There are different types of loans, from personal loans to business loans. You can...
Can You Pay Off a Loan With a Credit Card?
If you’re paying off an expensive loan and are looking for a cheaper way to clear...

Mentioned Banks

When you’re first starting out with your own business or start-up, it’s often tempting to just use your own personal bank account for your finances. It’s easy, doesn’t cost any...
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About Bank of Scotland Bank of Scotland is a commercial clearing bank based in Edinburgh. Not to be confused with Royal Bank of Scotland, it was established in 1695 and is one...
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About ClearBank ClearBank is a new clearing bank founded by WorldPay founder Neil Ogden. It is the first new clearing bank opened in the UK in 250 years. It is a ‘bank for banks’...
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About Clydesdale Bank Clydesdale Bank is a Scottish commercial bank founded in Glasgow in 1838. Independent until 1920 when it was purchased by Midland Bank, it is the smallest...
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About Havin Bank Havin Bank, formerly known as Havana International Bank, or HIB, was founded in the United Kingdom in 1972. It received its banking authorisation the following...
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About Lloyds Bank Lloyds Bank is a British retail and commercial bank. One of the ‘Big Four’ clearing banks, it was founded in Birmingham in 1765. It is the largest retail bank...
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About RBS RBS, or Royal Bank of Scotland, is a retail banking subsidiary of the Royal Bank of Scotland Group. The Group’s other retail subsidiaries are NatWest and Ulster Bank....
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About Virgin Money Virgin Money is a bank and financial services company based in the UK. Originally launched as Virgin Direct Personal Financial Services in 1995, its second incarnation...
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