Business loans for new businesses
Starting a business in the UK is exciting, but accessing funding early on can be challenging. With limited trading history and no track record, many lenders are cautious about offering loans to startups or new businesses.
That doesn’t mean you’re out of options. In fact, there are tailored loan types and government-backed schemes designed specifically for new businesses looking to take their first step.
What is a startup or new business loan?
A business loan for new businesses is a type of finance designed to help companies that are newly formed or still in the early stages of trading.
These loans can be used for:
buying stock or equipment
hiring staff
setting up your workspace or website
launching your product or service
Some options are available even before your business starts trading, while others require a few months of revenue history.
Who can apply for a startup loan?
You may be eligible for a new business loan if:
your business is registered in the UK
you’re aged 18 or over
you’ve been trading for less than 36 months (or not yet)
you have a business plan and cash flow forecasts
Having good personal credit and a strong business idea can increase your chances of approval.
What are the different types of startup business loans?
There are several types of finance available for new businesses:
Loan type | Key features | Suitable for |
Government startup loan | unsecured loan up to £25,000 | pre-trading or early stage |
Unsecured business loan | based on creditworthiness and forecasts | early-stage with some revenue |
Revenue-based finance | repayments flex with your turnover | businesses with variable income |
Asset finance | buy or lease equipment over time | product-based startups |
Crowdfunding | raise funds from a community | tech or consumer startups with growth appeal |
Equity finance | sell shares for growth capital | high-growth or VC-ready businesses |
Each has its own eligibility criteria, repayment terms and risks.
Types of loans available for new businesses
Secured business loans
A secured business loan uses assets as collateral for the loan. This can lead to a bigger amount of funding, possibly with lower interest rates, but can pose a risk to your assets if you miss any repayments or default on the loan.
Unsecured business loans
Many early-stage businesses don’t have the assets required by lenders to gain access to secured funding. Unsecured business loans don’t require you to put up any assets as security. But they do often come with slightly higher interest rates to reflect the additional risk the lender is taking on.
Invoice finance
Invoice finance enables new businesses to gain access to the cash tied up in unpaid invoices. Instead of waiting 30 days or more for customers to pay, a lender advances you a portion of the invoice upfront. This can be helpful for B2B businesses in the early stages of their growth journey.
Commercial mortgage
A commercial mortgage essentially lets you spread the cost of purchasing a property, whether that’s a company headquarters or a warehouse. The loan uses the property itself as security and these loan types often come with lower interest rates when compared to something like a short-term business loan.
Government backed start up loan
The government offers a loan up to £25,000 to businesses with less than 3 years of trading history. It functions similarly to a personal loan, has an interest rate of 6% and usually includes a monthly repayment plan
Merchant cash advance
A merchant cash advance offers a lump sum payment in exchange for a percentage of future earnings. The advance is based on your company revenue.
Bridging loan
A bridging loan bridges the gap between funding needs. Let’s say you want to buy a company premises today, but won’t sell your current company property for another 6 months, as you’d like some time between the move to ensure your team properly settle into their new offices.
How does Funding Options work?
Tell us how much you need
We’ll ask a few questions about your business and the reason for your loan.
Get quotes instantly
Our smart technology will compare quotes from up to 80+ lenders to help you find the ideal business loan.
Apply for a Business Loan 🎉
We'll be there to guide you through every step of the process.
Trusted by over 17,000 customers
Why choose Funding Options by Tide?
Funding Options by Tide helps UK SMEs find fast, tailored business finance by connecting them with over 80 trusted lenders. Backed by Tide and FCA-regulated, the service is free and easy to use.
Compare 80+ lenders
Access a wide range of trusted lenders: from high street banks to alternative finance providers.
No fees or obligations
Our service is completely free to use. You’re in control of who you borrow from.
Fast, personalised results
Get real-time matches based on your business profile and funding needs.
Expert support when you need it
Our team is here to help — by phone, chat, or email.
Trusted by over 17,000 customers
Estimate your costs today
If you're ready to take your business to the next level, use our business loans calculator to get an idea of what you can afford.
Want to understand the cost of your loan?
Use our business loan calculator below to find out how much you can borrow to take your business to the next level.
Calculations are indicative only and intended as a guide only. The figures calculated are not a statement of the actual repayments that will be charged on any actual loan and do not constitute a loan offer.
Monthly payments
-
Monthly interest
-
Total interest
-
Length of loan
-
Total cost of loan
-
Financial product information
Representative example*
• 7.63% APR Representative based on a loan of £50,000 repayable over 24 months.
• Monthly repayment of £2,252.94. The total amount payable is £54,070.56
*Some lenders may apply fees during the application process, please note that these are set and provided by these entities.
Annual Percentage Rates
Rates from 2.75% APR
Repayment period
1 month to 30 years terms
Alternatives to business loans
Equity finance
get funding in exchange for a stake in your company
Startup grants
non-repayable funding from local or national schemes
Crowdfunding
raise money from customers or communities
Friends and family
informal loans or equity
Personal savings
bootstrapping your launch phase
Benefits of startup loans
Access to working capital during early stages
Fixed, predictable repayment terms
No need to give up equity
Helps build your business credit profile
Some schemes include mentorship and support
UK startup funding trends
Trends
average loan size in 2024 was £11,800
45% of recipients were women or from ethnic minority backgrounds
1 in 5 startups used the loan to access further funding later
Source: British Business Bank
How much can I borrow?
Startup loan amounts usually range from £5,000 to £25,000 per founder under government schemes. Some lenders offer up to £250,000 based on projected revenue and business plan strength.
Repayment terms range between 1–5 years, with fixed interest rates.
An example: from pitch to profit
An e-commerce startup based in Birmingham secured a £15,000 government Start Up Loan after submitting a strong business plan and cash flow forecast.
Within 9 months, they reached profitability and used their growing revenue to qualify for a second loan – this time a £35,000 unsecured business loan – to scale their warehouse and fulfilment setup.
Learn more about business loans for new businesses
Can a brand-new UK business get a business loan?
Yes, many lenders offer specialised business loans for new businesses, including unsecured and government-backed loans.
Are there government loan schemes for new businesses in the UK?
Yes, the UK government offers Start-Up Loans of up to £25,000 with fixed 6% interest and mentoring support.
What is the easiest business loan to get for a startup?
Generally, unsecured loans, merchant cash advances, or invoice financing can be easier options due to less stringent collateral requirements.
How do I qualify for an unsecured startup business loan in the UK?
Typically, lenders require a strong business plan, UK business registration, personal credit history checks, and proof of potential revenue or existing contracts
Can I apply for a startup business loan online?
Yes, Funding Options by Tide enables online applications, providing quick eligibility checks without impacting your credit score.
Are business loans for startups expensive?
Startup loans can have higher interest rates due to the perceived risk; typical rates range from 5% to 20%, depending on the lender and loan type.
How much funding can a new UK business typically borrow?
Loans for new businesses typically range from £1,000 to £750,000, depending on your business plan, collateral, and lender criteria.
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 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.
Vivek Seda
Business Finance Manager
Vivek is the Asset Based Lending Manager at Funding Options by Tide. Vivek has been in the industry for over 10 years, working for both lenders and brokers. His product specialisms cover Asset Finance, Invoice Finance, Property Finance and structured transactions.