Start up loans

Start up loans for small business

Business Start Up LoansStarting a business can be a risky proposition, and finding the right startup loan to get your business off the ground can be one of the most difficult challenges you’ll face.

Many banks offer loans specifically for startup businesses, and they may be willing to work with you to create a customized loan package that meets your needs. Another option is to seek out investors.

This can be a good option if you have a solid business plan and are confident in your ability to succeed. There are also a number of online lenders that specialise in loans for startups.

These lenders typically have lower interest rates and more flexible terms than traditional lenders, making them an attractive option for many entrepreneurs.

Whichever route you choose, taking the time to research your options and find the best fit for your needs is essential to ensure that your startup business gets the funding it needs to succeed.

What is a startup business loan?

A start up business loan is a form of finance for individuals who are in the early stages of planning or growing their business who have been trading for less than 24 month or have no credit history.

Start up loans can help entrepreneurs to growth their venture as well as support them to purchase stock, fund marketing campaigns, assist with advertising costs or give them straightforward working capital to launch the company.

Startup business loans are usually unsecured, this means that there is no need to provide business assets as security. With start up finance you can:

• Receive between £1,000 – £200,000

• Repay over a period of 1 – 3 years

• Benefit from competitive interest rates

How to get a startup business loan?

If you are looking to venture into business for yourself, you may be wondering how to finance the start-up, and one of the questions you will ask yourself is ‘where to get a business loans with no trading history?’ Well as you are on this page you have come to a great starting point.

The UK Government are actively pushing for new companies post Covid-19, they are offering a government-backed Start Up Loan of £500 to £25,000 to start or grow your business. But there it is not what is seems!

A startup business loan is available to business owners from traditional lenders such as banks or alternative lenders such as online lenders and credit brokers. If you are a new business you will find it challenging to secure funding from lenders due to the fact you are seen as a high risk.

Approval rates decrease with a limited trading history as well as a lack of working capital or collateral. Alternative finance providers have lead the way for new businesses and start-ups to have more options. Start up loans for new businesses are available from:

  • Online lenders & Credit Brokers
  • Traditional lenders

Online lenders & Credit Brokers

Online lenders and Credit Brokers should be one of the first stops if you are looking for financing options for your businesses. They make it easier for new businesses to get approved for quick finance due to their access to the whole of the market. Start-ups are provided with flexibility and choice due to their visibility online, and some online lenders offer funding to businesses with bad credit, its worth having the discussion with a broker if you have.

Due to applications being process completed online, the process is transparent, we have seen subject to criteria funds being accessed in just 24 hours. This is the complete opposed to the number of weeks it takes to get approved from your high street banks.

Brokers and online lenders tend to have extremely clear visibility on the fees they charge and transparency on the loan terms. Now you are a business owner you will have a clear understanding of much you need to pay back and when the repayments are due. Lenders will keep you in the loop in regards to your finances and send text reminders for payment deadlines to help you manage your finances.

  • Approval rates are generally higher
  • Most credit scores are welcome
  • Quick turnaround and payouts

Traditional lenders

When it comes to securing startup funding, small business owners have a number of options available to them. One popular choice is to take out a loan from a traditional lender, such as a high street bank. There are a number of advantages to this approach.

First of all, banks tend to offer lower interest rates than alternative lenders. Secondly, they are usually more willing to lend larger sums of money. Finally, banks often have dedicated small business teams who can provide valuable advice and support. However, it should be noted that banks also have stricter eligibility criteria than other types of lender.

As a result, not every small business owner will be able to secure a loan from a bank. But for those that do meet the requirements, taking out a loan from a traditional lender can be an excellent option.

What types of startup business loans are there?

There are many types of small business start up loans in 2024.  Here are a few types you may wish to consider:

Secured Business Loans – are for business owner looking for a loan should consider the option of a secured business loan. By putting up collateral, typically in the form of equipment or property, the business owner can receive a lower interest rate and more favorable terms. This is because the lender views the loan as less of a risk. In addition, a secured loan can give the business owner the peace of mind of knowing that they will not lose their collateral if they are unable to make their payments. For these reasons, a secured business loan can be an attractive option for those looking to finance their business.

Unsecured Business Loans –  offer a viable alternative for small businesses that are unable to secure traditional financing. These loans are based on the personal creditworthiness of the borrower, rather than the collateral of the business. As a result, they can be easier to obtain and provide a much-needed source of funding for early-stage businesses.

Merchant Cash Advance – is a type of funding that provides businesses with an alternative to traditional loans. Unlike a loan, a merchant cash advance is repaid through a percentage of future credit card sales. This funding option can be helpful for businesses that have difficulty qualifying for a loan or need access to capital quickly. The repayment terms are typically more flexible than those of a loan, making this funding option more accessible for businesses with seasonal or fluctuating income. While merchant cash advances can be a helpful way to obtain funding, it is important to understand the fees and repayment terms before signing any agreement.

Crowdfunding – is a way of raising money by asking a large group of people for small contributions. This can be done online through platforms like Kickstarter or Indiegogo, or offline through events like benefit concerts or bake sales. Although it takes some effort to plan and execute a successful crowdfunding campaign, many people find it to be a worthwhile endeavor. Not only does it allow them to raise the capital they need to get their business off the ground, but it also allows them to gauge public interest in their product or service.

Business credit cards – can make purchases without having to worry about being immediately approved for a loan. This can give you the flexibility to make purchases when you need to and pay back the balance over time. In addition, business credit cards often offer cash back or rewards points, which can save you money on future purchases. Finally, business credit cards can help you build your business credit history, which can be helpful in securing loans for future expansion. To get the most out of your business credit card, be sure to use it responsibly and pay your balance in full each month.

What is the interest rate like on startup business loans?

The average interest rate for a startup business loan is between 8% and 13%. However, the actual interest rate you’ll pay will depend on a number of factors, including the lender you choose, the amount you borrow, and your credit score.

If you have good credit, you may be able to qualify for a lower interest rate. And if you’re able to put down a large down payment, you may also be able to get a lower interest rate. The best way to find out what interest rate you’ll pay is to shop around and compare rates from multiple lenders.

What are the pros of startup business loans?

Many aspiring entrepreneurs have an innovative idea for a new business but lack the capital to get it off the ground. A startup business loan can provide the financial resources needed to turn a great idea into a thriving business. One of the biggest advantages of a startup loan is that it can give you access to the funds you need to get your business up and running.

This can be especially helpful if you don’t have any collateral or personal savings to draw from. In addition, a loan can help you build up your business credit, which can be beneficial in the long run.

Another pro is that repayment terms are often flexible, giving you some breathing room as you get your business off the ground. While there are some risks associated with taking out a loan, carefully considering all of the pros and cons can help you make the best decision for your new business.

  • Keep control of your business

Business loans are a fantastic way for business owners to upscale their startup while still keeping all their shares within the company. This allows them to enjoy the luxury of upscaling without having to give up any ownership of their business. Business loans also provide the funds necessary to expand and grow a business, which can lead to increased profits and greater success in the long run.

In addition, business loans can help business owners to consolidate debt, which can save money on interest payments and reduce the overall amount of debt that a business has. consolidating debt can also help improve a business’s credit score, making it easier to obtain future financing. Overall, business loans are an excellent way for business owners to improve their businesses and increase their chances of success.

  • Temporary in nature

Loans from traditional lending institutions often come with a repayment period of anywhere from a few months to a few years. After the loan is repaid in full, the lender will generally have no further involvement with the borrower. This can be advantageous for borrowers who want to avoid ongoing obligations to a lender. However, it also means that borrowers who need additional financing in the future may need to reapply for a new loan.

Attracting investors, on the other hand, generally comes with an ongoing obligation to pay dividends to shareholders. This obligation can last as long as the company remains in business. While this can be seen as a disadvantage, it can also provide some stability for investors and ensure that they receive regular payments. For companies that are seeking long-term funding, attracting investors may be a more viable option than taking out a traditional loan.

  • Build business credit

It is not uncommon for businesses to need additional funding as they expand and grow. As production increases, so does the need for money. Even if a company did not start with a loan, they might need to take out one in order to expand or design a new product or service. This can be difficult to do, especially for small businesses, but it is often necessary in order to keep the business running smoothly.

Fortunately, there are many options available for companies that need funding. Banks and other financial institutions are typically willing to provide loans, and there are also many private investors who are interested in investing in growing businesses. The key is to carefully consider all of the options and choose the one that is best for the company. With careful planning and execution, any business can successfully obtain the funding it needs to continue growing.

  • Personal Wealth Can Be Safeguarded

Every new business initiative carries a risk; even the most well-planned venture may face challenges beyond your control as the owner. A starting business loan might assist you to separate your personal money from the finances of your company. This way, if your business doesn’t succeed, you won’t be left in debt. Of course, a loan also has its own risks; you will need to be sure that you can make the payments on time.

However, a loan can be a valuable tool for any new business owner. It can provide the financial security you need to get your business off the ground and separating your personal finances from the risks of owning a business can give you the peace of mind you need to succeed.

What can I use a start up loan for?

There are many things that a start up business loan can be used for. The most common use for the loan is to purchase inventory and supplies. This can be anything from office furniture to raw materials. The loan can also be used to hire employees and pay for marketing expenses. In some cases, the loan can even be used to buy an existing business.

No matter how the loan is used, it is important to remember that it must be repaid with interest. As a result, start up businesses should carefully consider how they will use the loan before they apply for one.

Be careful when you borrow

If you are successful in obtaining a startup business loan, you need to be aware it comes with certain responsibilities and risks. These include receiving an influx of cash for your business. It’s important to sensibly by effectively utilise the money that you have borrowed to prevent common business spending mistakes.

  1. Ensure that business money is kept in a separate account to your normal business account, only transfer the money across as and when you need it.
  2. Maintain a good relations with your lender always. Keeping an open and honest dialogue with them ensures a good communication should you have issues with future repayment deadlines.
  3. Ensure that you have set up automatic repayments to make sure you are never late or miss payment deadlines.

Can I get a startup loan during COVID-19?

Many aspiring entrepreneurs have put their plans on hold during the COVID-19 pandemic. But with vaccines on the horizon and the economy beginning to rebound, now may be the perfect time to start a business. The good news is that there are still plenty of options for funding a startup, even during these challenging times.

One option is to apply for a Small Business loan. The SBA has expanded its lending programs in response to the pandemic, making it easier for small businesses to get the financing they need.

Another option is to seek out investors or venture capitalists who are willing to invest in high-growth startups. With a little research and perseverance, it is still possible to get the funding you need to launch your dream business.

What are government start up loans?

In the UK, startup loans are offered by the Startup Loan Company, which is part of the British Business Bank. The loans are available to new businesses and are intended to help them get started. The loans are typically for a period of one year and have an interest rate of 6%. The amount that can be borrowed depends on the individual business, but the maximum loan is £25,000.

Startups can use the money for a variety of purposes, including buying equipment, hiring staff, or investing in marketing. repayments are made on a monthly basis, and the loan is repaid over a period of five years. If you’re thinking of starting a business in the UK, a startup loan could be a good option for you.

Why choose us for your business start up loan?

Decide on the best type of financing for your business is a key step in ensuring its success. To get started, you’ll need to understand the different types of loans available and their respective advantages and disadvantages. For example, pdq funding offers short-term loans that can be used for a variety of purposes, including working capital, inventory, and equipment purchases.

However, these loans typically come with higher interest rates than other types of financing. As a result, you’ll need to carefully consider whether the benefits of pdq funding’s short-term loans outweigh the costs. If you’re looking for a long-term loan to finance the purchase of a new building or piece of equipment, pdq funding also offers competitive rates and terms.

In addition, pdq funding’s team of experts can help you navigate the often complex process of securing financing. When it comes to choosing a lender for your business start-up loan, pdq funding should be at the top of your list.

Do start up loans require personal guarantees?

There are a few things to consider when taking out a start up loan, one of which is whether or not you will be required to provide a personal guarantee. In general, a personal guarantee means that you are pledging your personal assets as collateral in case you are unable to repay the loan. While this may seem like a risky proposition, there are actually a number of benefits to taking out a loan with a personal guarantee.

For one, it shows the lender that you are fully committed to repaying the loan and are willing to take on additional risk. Additionally, it can help you secure a lower interest rate, as the lender will feel more confident that they will be repaid. Ultimately, whether or not you need to provide a personal guarantee will depend on the specific terms of your loan agreement. So be sure to read over the agreement carefully before signing anything.

Start up loans for bad credit

Bad credit or having a poor credit history isn’t necessarily a barrier to getting a business startup loan. Lenders do carry out a full credit check on any applicants. All lenders now are committed to lending responsibly and has to ensure that applicants will be able to repay the loan.

There are a number business loans for bad credit  available to anyone suffering from debt but wants to start up in business but a story is always required and some trading history with poor credit.

Startup Loans are not available to anyone who:

  • Is filing for or currently is a bankrupt or on a Debt Relief Order (DRO)
  • Currently in an Individual Voluntary Agreement (IVA) or Trust Deed
  • Paying down their debts with a Debt Management Programs or Debt Arrangement Schemes

Am I eligible for a start up business loan?

In order to be eligible for a start-up business loan, your business is required to meet the following criteria:

  • Business must have been trading for between 6 – 24 months.
  • The business owner must be over the age of 18.
  • The business must be registered in the United Kingdom.

Business loans are offered to all businesses in their first twenty-four months of operating. Whilst a business credit check will be carried out as a necessary part of the application, we aim to help all businesses, this includes those with poor credit,  lenders will consider a number of factors before making a decision in principle.

Frequently asked questions

How to get a startup business loan

To get a startup business loan, is simple, firstly you will have to complete the online enquiry form. If you require government assistance you will need to apply to the startup loan company.

How easy is it to get a business startup loan

To get a business startup loan is dependent on a number of factors, your business idea, your own personal credit score and how strong your business plan is.

How to get a startup business loan with bad credit

In order to get a startup business loan with bad credit you will need to be a home owner or have someone who believes in your vision and is willing to be a guarantor.

How to get a bank loan for a startup business

To get a bank loan and use it as a startup business loan, the bank will require some form of security from you.

Apply for a start up loan for your business

 Step 1:

Visit our application page and provide the relevant information. This will ensure that we match you with an ideal lender. We will then ask you for further information about your business. You’ll need to be ready to tell us the following when you apply for a start up business loan:

  • The name of your business
  • How long you’ve been in business
  • Your average monthly card sales
  • Amount you are looking to borrow and over what period

Step 2:

Will will then require a few personal details, so please be ready to tell us:

  • Your title, along with you first name and surname
  • Position you hold within the business that is seeking a loan
  • Email and telephone number, so that we can stay in further contact with you
  • Registered office address and company registration number

Step 3:

Read through our terms and conditions carefully, and if you’re happy to continue, click get a quote’. From here your application will be processed and reviewed by a member of our business finance suppliers team, who will help you find the correct lender for your emergency business loan. 

Step 4:

We will then be in touch with you to confirm the conditions of your startup business loan agreement.

Step 5:

Once the application is complete, it will be sent off and approved by a lender. You can then have a discussion with them regarding the terms of the loan. These terms will include interest rates, as well as how much the borrower will repay each month. The loan is then provided to you on an agreed and transparent basis. As one of the UK’s leading startup business loan lender we are here to support the growth of your business with alternative business funding.

Lee Jones Profile Image
Business Finance Expert at PDQ Funding

Lee Jones is a seasoned Business Finance Specialist with over two decades of invaluable experience in the financial sector. With a keen eye for market trends and a passion for helping businesses thrive, Lee has become a trusted advisor to countless organizations seeking to navigate the complexities of finance.