Best Start Up Business Loans June 2024

Lloyds Bank offers loans for start ups, although expect to be asked for additional information and oversight – such as cash-flow forecasts – before it considers lending to your new business.

Lloyds Bank also gives you the flexibility to pay off loans in full before the term ends at no extra cost, and it gains points in our rankings for offering customers wide-ranging customer service options. For more information, check out NerdWallet’s Lloyds Bank Business Loans Review.

Lloyds Bank loans key features:

• Secured or unsecured: Lloyds Bank’s offering includes both secured and unsecured business loans for small businesses.
• Early repayment: Repay your Lloyds business loan in full and ahead of schedule without worrying about incurring a penalty.
• Small businesses upper limit of £50,000: A small business can borrow between £1,000 and £50,000 with Lloyds.
• Loan term stretches to 25 years: A Lloyds small business loan can be repaid over between one and 25 years.

Pros

• You can borrow for up to 25 years with a secured or unsecured small business loan.
• Small businesses can borrow between £1,000 and £50,000.
• The lender offers web-based support via a virtual assistant or through the Lloyds Business app, alongside help @LloydsBank on its X account (formerly Twitter). Face-to-face assistance is also available in Lloyds branches across England and Wales.
• You won’t incur any early repayment charges if you want to pay off your loan in full before your term ends.

Cons

• There are no Lloyds Bank branches in Scotland or Northern Ireland.
• You can only access a Lloyds small business loan if you have a turnover of less than £3 million.
• You’ll need to provide a personal guarantee if you’re applying as a limited company or limited liability partnership.

HSBC offers loans for start-up businesses, although it expects you to provide proof of how you intend to repay the loan. For a new business, this may take the form of a business plan and cash-flow forecast.

HSBC’s loan options include a fixed-rate Small Business loan of up to £25,000, in addition to a fixed- or variable rate Flexible Business Loan, for borrowing over £25,000. You could be eligible for cashback on your loan if you use it for environmental purposes. To find out more, read NerdWallet’s HSBC Business Loans Review.

HSBC business loans key features:

• Small businesses borrow up to £25,000: HSBC has a small business option starting at £1,000 and extending up to £25,000. For higher amounts, businesses can opt for the Flexible Business Loan.
• Terms of 10 years for Small Business Loans: A Small Business Loan can be repaid over between 12 months and 10 years, while the Flexible Business Loan can go up to 20 years.
• Capital repayment holidays: Taking a capital repayment holiday when you first get your Small or Flexible Business Loan can offer you more flexibility, though it will mean you pay more in interest overall.
• Green SME Cashback Fund: For business loans going towards environmental projects, business owners can qualify for cashback on the amount they borrow.

Pros

• With HSBC, businesses can borrow up to £10,000 (HSBC Kinetic Small Business Loan), up to £25,000 (Small Business Loan) or a potentially unlimited amount (Flexible Business Loan).
• You can borrow over a term of up to 10 years (Small Business Loan and HSBC Kinetic Small Business Loan) or up to 20 years (Flexible Business Loan).
• Access to customer service is via the lender’s website, phone helpline and mobile app, as well as face-to-face support in a branch.
• There is no arrangement fee for the HSBC Small Business Loan.

Cons

• Although you can make overpayments without a fee, you will have to pay an interest charge for early repayment in full for the Small Business Loan. You may also have to pay a prepayment fee and an early repayment fee for the Flexible Business Loan.
• Borrowers seeking to secure HSBC’s Flexible Business Loan product may have to pay arrangement fees.
• The term flexibility of an HSBC Small Business Loan is not as good as some other providers on the market.

Barclays offers a variety of borrowing solutions for businesses at different stages of growth and across a variety of sectors. Options include unsecured and secured business loans, as well as commercial mortgages, business overdrafts, asset finance, invoice finance, and its Barclaycard for business credit card. 

Start ups can borrow from Barclays – just expect to be asked to provide a forecast of your business’s annual sales turnover before you can access any finance.

For further information about Barclays business loans, read NerdWallet’s Barclays Business Loans Review.

Barclays business loans key features:

• Choices: Barclays offers a range of borrowing options to suit different business needs, including secured and unsecured business loans.
• Repayment holidays: In some cases, Barclays will allow businesses to take a six-month repayment holiday at the start of an unsecured business loan term. Interest will continue to accrue on the loan and is calculated within future repayments.
• Rates options: Borrowers can choose between fixed- and variable interest rates.

Pros

• Businesses can borrow from one to 10 years with an unsecured loan.
• Barclays offers a wide range of customer service options, including social media, via its app or ‘help and support’ on your online account.
• Barclays has branches in England, Wales, Scotland and Northern Ireland.
• You can borrow up to £100,000 with an unsecured loan, subject to status.

Cons

• General business phone lines are only open five days a week.
• More information may be required to apply for a Barclays business loan online if you are not an existing customer.
• Unsecured loans are not available for all industries, but Barclays does not specify which industries may be excluded on its website.

Direct lender Fleximize only lends to businesses with at least six months’ trading history. While one year’s trading history is required to access their flagship Flexiloan product, only six months are required for businesses seeking to take out a Flexiloan Lite. As such, this product has been designed with start ups and other new businesses in mind.

Fleximize offers customers both secured and unsecured business loans up to £500,000. However, businesses must have a minimum monthly turnover of £5,000 to apply. To find out more, read NerdWallet’s Fleximize Business Loans Review.

Fleximize business loans key features:

• Borrow as much as £500,000: A Fleximize loan could give you the option of borrowing a maximum of £500,000.
• Short-term focus: Terms are between three and 12 months for the Flexiloan Lite.
• No early repayment fees: Borrowers can overpay their loan, or pay it back in full before the term ends, without worrying about fees.
• Decisions on loan applications are made within 24 hours.

Pros

• With Fleximize, you can borrow between £5,000 and £500,000, subject to status.
• Fleximize offers short-term lending for start-up businesses, with term lengths of three to 12 months for Flexiloan Lite.
• With the Flexiloan Lite, Fleximize offers business loans specifically designed for newer organisations.
• You can repay your Fleximize business loan early at no extra cost, and you will only pay interest for the time you’ve had the loan.

Cons

• Fleximize has limited remote customer service options, with only an online contact form and phone line on weekdays. You can visit the company’s HQ, but this is just one location, in Ipswich.
• All Fleximize products, including secured loans, require a personal guarantee from at least one director or shareholder. Secured loans also require an equitable charge, which means the lender may claim equity in a property if the borrower defaults on the loan. 
• You can only borrow a maximum of £250,000 on an unsecured Flexiloan or Flexiloan Lite if you are based in Scotland or Northern Ireland.
• Sole trader and non-limited partnership loans start at over £25,000.
• Businesses need a monthly turnover of at least £5,000 before they can access Flexiloan products.

TSB’s lending options can suit several different business needs, with fixed- and variable rate business loans available for small businesses. TSB says it is willing to lend to businesses that are just starting out, and nowhere does it say that an established trading history is essential to access their loan products.

You will usually need to have a TSB business current account to take out a small business loan. To find out more, read NerdWallet’s TSB Business Loans Review.

TSB business loans key features:

• Interest options: Borrowers can choose between a fixed-rate loan and a variable interest rate loan, known as a ‘base rate loan’.
• Secured or unsecured: Secured and unsecured business loans are available as both fixed- and variable rate products.
• Variable term lengths: Repayment periods of TSB loans can vary based on the type of loan chosen.
• Repayment holidays: You may be eligible for repayment holidays on a TSB business loan. Bear in mind that you will still accrue interest when you take a break from your repayments, so you will pay more interest overall.

Pros

• TSB’s fixed-rate loan offers flexible loan terms of between one and 10 years. (Its base rate loan offers loans of up to 25 years).
• You can access customer service agents over the phone or face to face in a branch in England, Scotland and Wales.
• You can borrow from £1,000 up to £1 million with its fixed-rate loan (or from £25,001 to a potentially unlimited amount with its base rate loan).

Cons

• You will generally have to open a business current account to be eligible for a small business loan.
• There are no 24/7 customer service options for business loan customers.
• Break costs may be applied if you repay part or all of a fixed-rate loan before the end of the agreed term. This does not apply to base rate loans.

iwoca gives business access to flexible loans that suit a range of purposes. If you’re a start up, you can borrow up to £10,000 from iwoca without needing any trading history.

A dedicated business loans provider, iwoca currently offers one type of business loan: the Flexi-Loan. Find out more by reading NerdWallet’s iwoca Business Loans Review.

iwoca business loans key features:

• Different borrowing limit for start up businesses: While established small businesses can borrow from £1,000 to £500,000 with iwoca, start-up borrowing is capped at £10,000.
• Short-term flexibility: You can pay back an iwoca business loan over term lengths from one day to two years.
• Early repayment: Borrowers will not face an early repayment charge on the iwoca Flexi-Loan.
• Not for sole traders: Only limited companies, limited liability partnerships and ordinary partnerships can apply for iwoca business loans.

Pros

• iwoca welcomes applications from start-up businesses, which can borrow up to £10,000 with the Flexi-Loan.
• With loan terms of one day to two years, iwoca may be suitable if you are looking for short-term borrowing.
• There are no early repayment fees.
• Phone and online customer service and support are available.

Cons

• Start ups are offered a lower upper borrowing limit than established businesses, meaning other providers on the market may be able to offer a larger loan to your new enterprise.
• All iwoca Flexi-Loans come with a variable interest rate.
• Sole traders are not eligible for an iwoca business loan, while limited companies will be required to provide a personal guarantee – typically from one of the company directors.
• iwoca has no app, so there is no app-based customer service.
• iwoca has no branches, so there is no face-to-face customer service (though you can visit its headquarters in London).

Cubefunder is a direct lender which claims to value the human element in business lending, meaning it promises to judge businesses by more than just their credit score. This provider of short-term small business loans scores well for the upper borrowing limit and fee-free repayments but loses points for its limited customer service options. 

Start-up businesses can apply to Cubefunder for a loan, provided they have been trading for three months or more. Find out more by reading NerdWallet’s Cubefunder business loans review.

Cubefunder business loans key features:

• Different borrowing limits for sole traders and limited companies: Cubefunder’s Unsecured Business Loan is for limited companies only, with businesses able to borrow between £5,000 and £100,000. For sole traders, Cubefunder offers a smaller business loan for borrowing between £2,500 and £7,500.
• Short-term borrowing: Cubefunder business loans can be repaid over three to 12 months.
• Flexible repayment plan: You can choose to pay your loan back in daily or weekly instalments.
• Fee-free repayment: Cubefunder doesn’t charge fees for repaying your loan early.

Pros

• Cubefunder offers a maximum unsecured loan amount of £100,000.
• Cubefunder business loans are short-term, over a maximum of 12 months, and you can choose to repay your loan on a daily or weekly basis.
• As long as you pay the full amount in the agreed period, there are no individual late payment fees.
• There are no early repayment fees if you want to pay off your Cubefunder business loan before the term ends.

Cons

• Cubefunder business loans are only available for businesses based in England and Wales.
• If you are a new customer, you are required to provide a personal guarantee when taking out a loan.
• Sole traders are not eligible for an iwoca business loan, while limited companies will be required to provide a personal guarantee – typically from one of the company directors.
• You can only contact Cubefunder over the phone or by email. There is no mobile app, live chat feature or access at a branch.

Founded in 2014, the British Business Bank is a government-owned lender tasked with helping UK small businesses access the financial support they need to grow. Although it is owned by the Department for Business and Trade, the British Business Bank operates independently of the government.

The British Business Bank’s government-backed programmes include their Start Up Loans scheme, which is dedicated exclusively to funding new businesses which cannot secure finance from other sources. So far, the British Business Bank has lent over £1 billion worth of loans to over 100,000 UK small businesses. 

British Business Bank Start Up Loans key features:

• Designed for start ups: Start Up Loans from the British Business Bank have been explicitly created to help start-up businesses. 
• Borrow up to £25,000: Start-up businesses can take out loans ranging in size from £500 to £25,000 with interest fixed at 6% per annum.
• Fee-free borrowing: Start Up Loans can be repaid over one to five years, with no fees for early repayment and no fees for arranging the loan.
• Mentoring and support: After you receive the loan, you’re eligible for 12 months of free mentoring, plus support, guides, and access to templates to help you on your business journey. 

Pros

• Repayment terms are flexible, with no fees for early repayment.
• Start-up businesses looking to borrow smaller amounts can access loans starting at just £500.
• Founders of start-up businesses can apply for British Business Bank funding if they can’t secure finance from other sources.
• A year’s worth of free mentoring is included with the loan, in addition to support throughout the application process.

Cons

• Some large commercial lenders allow you to take out loans with much longer repayment terms than the British Business Bank.
• Customer service options are limited, with borrowers able to use an online enquiry form or telephone for support from 9am – 5pm on weekdays excluding Thursdays and from 9am – 4pm on Thursdays.
• At £25,000, the maximum borrowing limit is lower than the upper limit for many commercial lenders.