Business loans

Start up business loans for new and early-stage businesses

Starting out with no accounts yet? Compare start up business loan options, see what lenders check without a trading record and prepare a stronger application.

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Suitable businesses: Sole traders to limited companiesPartnerships and LLPs too
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In short

Yes, a new business can borrow before it has accounts, but the realistic routes depend on what you can show a lender.

With no trading record, a government-backed Start Up Loan, asset finance secured on the equipment, or a loan secured on property are usually the first options. Unsecured lenders generally want several months of bank statements, so choice improves as the business starts trading.

About start up business loans

A start up business loan is finance for a business that is new or has only traded for a short time.

It is for founders who need money for equipment, stock, premises, marketing, staff or working capital before the business has accounts to show a lender. Because there is no trading record to assess, lenders look closely at your business plan, cash flow forecast, personal credit history and any security or guarantees you can offer.

Smart Funding Solutions is a broker, not a lender. We pick out the lenders on our panel of 300+ that genuinely consider new businesses, and tell you plainly when another route, such as a government-backed Start Up Loan, is likely to suit you better. Start-up funding is one strand of our wider business finance guide.

Already trading but no filed accounts yet? See business loans without accounts.

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Finance options for new businesses

Government-backed Start Up Loans

The Start Up Loans programme, part of the British Business Bank, offers personal loans for business purposes to people starting or running a young business, with free mentoring and help writing a business plan. Check eligibility and current terms on the GOV.UK Start Up Loans page.

Asset finance

Hire purchase or leasing spreads the cost of vehicles, machinery and equipment. The asset secures the finance, so it is often one of the more accessible options for a new business, sometimes with a larger deposit. See asset finance.

Secured loans

If you or your business own property with equity, a secured business loan can open up larger amounts, because the lender relies more on the security than on trading history.

Unsecured and working capital loans

Once you have some months of trading and bank statements, more unsecured lenders will consider you, and working capital loans can cover payroll, rent and stock while income catches up. Few lenders offer these with no trading record at all.

Merchant cash advance and invoice finance

If you take card payments or invoice business customers, these products advance money against your sales. Both need some trading history, but they can become available sooner than a traditional bank loan. A merchant cash advance usually costs more than a loan, so it suits short-term needs.

Alternatives to a start-up loan: equity, grants and savings

The main alternatives to borrowing for a start-up are your own savings, equity from investors, and grants or accelerator programmes, none of which require fixed repayments but each of which has its own cost or conditions. Personal savings, angel investors, venture capital and crowdfunding exchange funding for a share of the business or rewards rather than repayments; the SEIS and EIS tax reliefs can make early-stage companies more attractive to investors. Grants and accelerators exist for some sectors and regions but are competitive. We don't arrange equity, but it is worth weighing alongside debt.

How start up business loans work

You borrow a lump sum and repay it with interest over an agreed term. Most start-up finance is either unsecured and backed by a personal guarantee from the founders, or secured against an asset such as property or the equipment being bought. Because the lender is taking more risk than with an established business, amounts are usually smaller and pricing higher. Options widen noticeably once the business has several months of bank statements to show.

How to choose the right start-up loan

Define the purpose: what exactly is the money for?
Match the term to the purpose: don't fund a five-year investment with a six-month loan, or a short gap with long-term debt.
Check affordability: forecast cash flow month by month, including repayments and a buffer for a slow start.
Compare total cost, including fees and any early repayment charges.
Understand security and guarantees before you sign.
Consider combining products, such as asset finance for equipment plus a smaller loan for launch costs.

Who qualifies for a start up business loan?

Start-up finance is most likely to be approved for founders with a credible business plan, a realistic cash flow forecast, clean personal credit, relevant experience and some of their own money in the business. Lenders look at:

Business plan: what you sell, who buys it, your costs and how the loan will be repaid.
Cash flow forecast: realistic monthly projections for at least the first year.
Personal credit history: for a new business, the founders' credit files carry significant weight.
Experience: relevant industry or management experience gives lenders confidence.
Your own investment: money you have put in yourself shows commitment.
Security and guarantees: property, assets or personal guarantees reduce the lender's risk.

Your legal structure also affects which lenders you can approach and who is liable; our guide to sole trader vs limited company explains the trade-offs.

How long does a start up business loan take?

A start up business loan typically takes from one to six weeks, and the quality of your business plan and forecast usually decides which end of that range you land at. With no accounts to review, underwriters spend longer testing the founders' assumptions, so expect questions on pricing, costs and how you will live while sales build. Asset finance for equipment or vehicles is often the quickest route, as the lender mainly needs the supplier quote, a deposit and the founders' details. A government-backed Start Up Loan includes business plan support and checks, which take time. A secured loan against property needs a valuation and legal work and is usually the slowest. Having a complete plan, a lender-ready forecast, ID and bank statements ready before you apply saves the most time.

Before you apply

Documents to prepare

A business plan and 12-month cash flow forecast
Proof of ID and address for each founder
Personal bank statements and details of your own finances
Business bank statements, if you have started trading
Details of any property or equipment offered as security, or quotes for equipment you will buy

Before you apply

How to improve your chances

Keep your personal credit file clean and check it for errors before applying
Open a dedicated business bank account from day one
Borrow only what your forecast shows you can repay
Use asset finance for equipment so other funds go further
Apply only to lenders that actually lend to start-ups, to avoid unnecessary refusals on your credit file

Pros and cons of borrowing to start a business

Advantages

You keep full ownership, unlike equity funding
Fixed repayments make budgeting predictable
Repaying on time builds a credit record for future borrowing

Disadvantages

Repayments start before the business may be profitable
Personal guarantees make you personally liable
Pricing is higher and choice narrower than for established businesses

Side by side

Compare your options

How the main business finance structures work. Lenders set their own terms, so treat this as a guide to the questions to ask.

Option	How you repay	Security	Often used for
Unsecured business loan	Fixed instalments, usually monthly	No charge over assets; a personal guarantee is usually required	Growth, stock, tax bills and cash flow
Secured business loan	Fixed instalments, often over a longer term	A charge over property or other assets	Larger sums, property and refinancing
Revolving credit facility	Interest on what you draw; repay and redraw	Varies by lender and case	Recurring or uneven cash flow gaps
Merchant cash advance	A share of future card takings	No charge over assets	Card-taking businesses with uneven months
Asset finance	Regular payments over the life of the asset	The asset being financed	Equipment, vehicles and machinery
Invoice finance	Settled as customers pay their invoices	Your unpaid invoices	Businesses waiting on customer payment

General information only. Every lender has its own criteria, and all finance is subject to status.

Which start-up finance fits which need?

Product	Suits	Watch out for
Start Up Loan	Launch costs for new businesses	Personal liability; it is a loan in your name
Asset finance	Equipment and vehicles	Asset can be recovered if payments are missed
Secured loan	Larger sums where there is property	Property at risk; slower to arrange
Working capital loan	Temporary cash gaps once trading	Short terms, frequent repayments
Merchant cash advance	Card-taking businesses needing quick funds	Higher cost, daily deductions
Invoice finance	B2B businesses waiting on invoices	Fees; with factoring, the provider contacts customers

The broker’s view

How we help new businesses

With a start-up, the underwriter is really assessing the founders: whether the forecast is grounded in real costs and pricing, how the loan is repaid if sales ramp up slowly, and how the founders cover their own living costs in the meantime. Lenders differ widely here. Some will not consider any business under a set trading age, some accept a new company where the founders have long experience in the same trade, and asset lenders may focus mainly on the equipment and deposit.

We review your plan and forecast before anything goes to a lender, point out gaps an underwriter is likely to question, and approach only lenders whose criteria fit your stage, so you avoid unnecessary refusals. If an offer is made, we go through the conditions, any guarantee and the security documents with you before you sign. Lenders make the final decision. It is free to enquire; any broker fee is disclosed separately before you proceed.

When your plan and forecast are ready, you can apply online or discuss your requirement with us first.

FAQs

Questions clients ask

Can I get a start-up loan with bad credit?

It is harder, because for a new business the founders' personal credit history is one of the main things lenders assess. Secured loans or asset finance may still be possible, and some lenders look at the reasons behind past problems. Checking and correcting your credit file before applying, and avoiding multiple applications, will help.

How much can a start-up borrow?

It depends on the product, the lender, your personal credit, any security and how convincingly your plan shows repayments can be met. New businesses typically start with smaller amounts and borrow more as they build a trading record. Asset finance and secured loans can support larger sums than unsecured lending. Borrow only what your forecast shows you can comfortably repay.

Do I need a personal guarantee for a start-up loan?

Usually, yes. With no trading record behind the business, most lenders ask founders to personally guarantee the borrowing, and some start-up finance is a personal loan in your own name. Either way you could be liable if the business cannot repay. Read any guarantee carefully and consider independent advice before signing.

Do I need to put my own money in to get a start up business loan?

It is not always required, but putting some of your own money into the business makes a start up business loan more likely to be approved. Lenders see your own investment as a sign of commitment and it reduces the amount they are asked to risk. For equipment and vehicles, asset finance for a new business may also need a larger deposit than an established firm would pay.

Can I get a start up business loan as a sole trader?

Yes, many start-up routes are open to sole traders, including government-backed Start Up Loans and asset finance for vans, tools and equipment. As a sole trader you are personally liable for the debt, and borrowing of £25,000 or less can be regulated consumer credit. Fewer unsecured lenders serve new sole traders than limited companies, so see our page on sole trader loans for what lenders check.

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