What types of businesses are eligible for startup loans?

19 May 2024

Is your business eligible for a start up loan? Here’s everything you need to know about getting a start up loan in 2024.

Hoe zit dat met startups en innovatieve ondernemingen?

Are we in a golden era for launching UK start ups?

Since 2012, the government-backed Start Up Loans scheme has delivered more than £100 million in funds to small businesses across the UK. Yet, competing for these government-backed loans is tough, leading many to seek alternative financing elsewhere. 

Let’s take a dive into the world of start up loans and how you can obtain one for your business.

What is a start up loan?

Start up loans are designed specifically to support the launch of a new business.

In the UK, the Start Up Loans initiative offers budding businesses and entrepreneurs the opportunity to obtain funding to launch a start up. This initiative shows a growing governmental interest in supporting and investing in small businesses, marking today as a crucial time to jumpstart your operations. 

However, the Start Up Loans initiative is not the only lending option in the UK.

Depending on your needs as a new business, you may need more funding than Start Up Loans can offer. As such, finding reliable lenders who offer fair lending terms to start ups can be crucial to starting your new business venture on the right financial foot. 

Which types of businesses are eligible for a start up loan? 

It makes sense that you might be wondering about your eligibility, after all, as a startup, your lack of a lending history can result in lenders deeming you a higher-risk borrower. By contrast, lenders offering start up loans likely understand that your business may lack a repayment history and are willing to work with you to help you establish your credit as a business. 

Eligibility is usually taken on a case by case basis and decided on by the provider, however, generally, start up loans are designed for most entrepreneurs looking to bring their business ideas into reality. While each provider will have their own terms can look at the British Business Bank’s criteria as an example. To be eligible for their scheme your company should have been trading for less than three years, the applicant should be a UK resident above the age of eighteen, and you should pass credit checks and be able to prove affordability. Furthermore, the loan cannot be taken out to cover any debts or to pay for any training programmes.

Start up loans are not exclusive to one industry or business size. Whether you have one investor or one hundred investors, start up loans can provide you with the working capital you need to establish consistent cash flow at your new business. 

While most industries and business types are eligible for a start up loan, there are some industries who may struggle to receive this form of funding, for example, gambling businesses, money transfer companies, and property investors. In the case of the British Business Bank’s start up loan, they exclude companies who work in weapons, pornography, and charities. Check your provider’s site for further eligibility information. 

The pros and cons of a start up loan

Start up loans offer crucial support to aspiring entrepreneurs. However, though start up loans can enable you to kickstart your new business venture, you need to be aware of the risks along the way. 

Here’s an overview of the pros and cons of a start up loan:


  • Increased working capital: Loans provide the necessary funds to cover initial expenses such as equipment purchases, technology investments, inventory acquisition, and marketing efforts.

  • Business expansion: With sufficient working capital as a start up, you can scale your operations more quickly and expand into new markets with greater ease. 


  • Debt obligations: Borrowing entails repayment obligations that can strain your cash flow, especially in the early stages of business development.

  • Interest rates: Accumulating interest over the loan term increases the overall cost of financing, potentially eating into profits. As such, timely repayments are a must. 

The impact of start up loans on creditworthiness 

Creditworthiness is one way lenders assess your likelihood to repay any loans. Their assessment may include looking at your debt repayment history, the regularity of your bill payments, and your income as a company or individual. 

Managed correctly, a start up loan could help improve your credit, as responsible repayment of a start up loan (and any other loan) can help you establish a positive credit history, facilitating future borrowing and investment opportunities. 

However, this is only true if you make regular payments. Failure to repay the loan could result in damaged credit and legal actions against your business, neither of which help to foster growth at a budding start up. 

Consider carefully what you can repay and only borrow an amount you feel comfortable with. 

Find lending for your start up through Funding Options by Tide

At Funding Options by Tide, we can help connect you with lenders offering start up loans as well as other types of business loans. 

Through our brokerage platform, you can find loans ranging from £1000 to £20M.

Get started with Funding Options by Tide.

Please note that the information above is not intended to be financial advice. You should seek independent financial advice before making any decisions about your financial future.

It’s important to remember that all loans and credit agreements come with risks. These risks include non-payment and late-payment of the agreed repayment plan, which could affect your business and personal credit score and impact your ability to find future funding. Always read the terms and conditions of every loan or credit agreement before you proceed. Contact us for support if you ever face difficulties making your repayments.

Funding Options, now part of Tide, helps UK firms access business finance, working directly with businesses and their trusted advisors. Funding Options are a credit broker and do not provide loans directly. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Funding Options can introduce applicants to a number of providers based on the applicants' circumstances and creditworthiness. Funding Options will receive a commission or finder’s fee for effecting such finance introductions.

Funding Options
Funding Options

Editorial team

Business Financing

Find a loan suitable for your start up

Apply Here

Subscribe to our newsletter today

Sign up for the best of Funding Options sent straight to your inbox.