What is a British Business Bank Start Up Loan?

A Start Up Loan is a government-backed personal loan available to individuals looking to start or grow a business in the UK. The loan is unsecured, so there’s no need to put forward any assets or guarantors to support an application. Up to four owners or partners in a business can apply for up to £25,000 each, meaning a maximum of £100,000 is available per business, at a fixed interest rate of 6% per annum. Businesses will need to repay the loan over a term of 1-5 years.

In addition to finance, successful applicants receive 12 months of free mentoring and support to help them succeed.

What are the criteria?

To be eligible to apply for a Start Up Loan, you must meet the following criteria:

• You must be 18 years of age or older

• You must be a current UK resident

• You must be 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 must be based in the UK

• You must have the right to work in the UK

• Your type of business and reason for wanting the loan is eligible under the terms of the scheme

• You must pass the credit checks and be able to afford to repay the loan

The loan can be spent on a wide range of things related to your business, such as equipment and stock, a premises, marketing, and promotional expenses. It’s important to note, however, that you must be able to describe your intentions for your loan within your business plan and cash flow forecast and explain how this will help you start and/or grow your business.

A success story

Tens of thousands of UK businesses have been backed with the help of a Start Up Loan. One such company is Hand-i-Craft.

Leo Winstanley founded Hand-i-Craft, based in Formby, after losing the ability to use his dominant hand and arm in a car accident. Leo’s car accident caused severe nerve damage, but Leo discovered woodworking as a form of physical and mental therapy.

Now, Leo runs a successful woodworking shop, stocking handmade items, finishes and accessories that are sold online. His YouTube channel ‘Hand-i-Craft’ has garnered over 11,000 subscribers, and he has become a prominent figure in the online woodworking community.

Leo applied for a Start Up Loan in January 2023 when he was looking for £10,000 to buy specialised equipment for his shop. After completing initial credit checks, Leo was assigned a mentor to help him create a three-year business plan.

“Although I had a lot of great ideas, I’m not from a business background,” said Leo. “[My mentor] helped me put together a business plan, looking at where I was aspiring to be and how I was going to repay the loan, and that was really helpful for me.”

After that, Leo’s application went through the final application stages. In total, his loan was approved within 6-8 weeks.

“Starting a business is no easy feat, and the support of the Start Up Loans programme, alongside a good dose of dedication, was pivotal in the early days of my business,” notes Leo.

“I’d made that decision in my mind that this is the direction I want to be taking my life and Start Up Loans enabled me to take that passion that I have and turn it into a small, functional business.”

An admirable ambassador

Leo has more recently been announced as a 2023 Start Up Loans Ambassador. Drawn from each of the UK’s 12 nations and regions, the Start Up Loans Ambassadors reflect the broad diversity of sectors and business owners supported via the programme.

“I’m excited to represent the Northwest as a 2023 Start Up Loans Ambassador and look forward to inspiring others to embrace entrepreneurship and create their unique success stories, just as I have created my own,” said Leo.

Dr Sophie Dale-Black, UK Network Director for the North of England, British Business Bank said: “Leo’s story demonstrates the immense possibilities that the Start Up Loans programme offers. It's exciting to be involved in an inspiring story of overcoming adversity. We’re looking forward to seeing his business grow as he shows that a disability is not a barrier to starting a business. Leo should be a role model for many businesses in the Northwest, and beyond, and offers a great example of how Start Up Loans can help transform lives.”

Since its inception in 2012, the Start Up Loan programme has delivered more than 105,000 loans to business owners across the UK, amounting to more than £1bn of funding. Of those loans, 40% of loan recipients have been women and 20% from Black, Asian, and Other Minority Ethnic backgrounds (not including White Minorities).

To find out more about Start Up Loans and to begin your application process, visit https://www.startuploans.co.uk/

This article originally appeared in the November/December issue of Startups Magazine. Click here to subscribe