Everyone can benefit from some financial support from time to time, especially if you are an entrepreneur or business owner looking for a cash injection. As funding can be difficult to find from potential investors and many lenders viewing start-ups as much riskier to lend to, it is not always simple. The good news is, however, there is another option to secure funds legitimately to make the early stages of your business more comfortable. If you have heard of government startup loans but are unsure of how they work and whether you are eligible, here is a quick overview to help.
Helping You Start in the Best Way
With the emphasis on helping those who want to start or grow their own business, a startup loan can be applied for amounts between £500 and £25,000. What makes these different to other types of business loans is that this scheme provides an unsecured personal loan, meaning the amount you borrow does not require you to provide any assets as collateral. Other features include a fixed interest rate of 6% per year and a repayment term between 1 and 5 years, with no admin fee for setting it up or any early repayment fees if you can clear the outstanding amount sooner.
One thing to remember is that like any government scheme or loan application in general, there is no guaranteed acceptance. In the same way that personal loans and short term loans can provide the funds you need quickly online, especially if you have unexpected bills to pay, this is subject to passing credit checks and an affordability assessment. As responsible lending is vital, the startup loan scheme is no different, and as a minimum requirement applicants will need to be over 18 years of age, be a UK resident and plan to start, or already have, a UK based business that is fully trading, but this must be for less than 24 months.
Those start-ups and entrepreneurs that are successfully approved will also receive free support for their business. This involves guidance to help complete your business plan as well as 12 months of free mentoring which can provide invaluable insights into the business world. You can apply for a startup loan here and check your eligibility, allowing you to register. The scheme provides mentoring and post-loan support which includes free templates online and guides to various aspects a start-up would need to know. Also, whilst an individual can apply for up to £25,000, this doesn’t mean your business cannot borrow more. For example, if your business partner wants to apply for up to £25,000, this is also possible. A maximum of £100,000 can be approved per start-up, so the potential this can have in helping your business get the best start in life is increased, especially considering it is unsecured borrowing.
As well as the eligibility already mentioned, applicants must be able to prove they have the right to work in the UK and have been unable to secure finance from other sources first. The type of business and the reason for needing the loan also needs to be disclosed to check if it is eligible under the scheme’s terms. For example, it cannot be used for those starting a property investment business or gambling/betting venture, and the funds cannot be used to cover other debt.
To find out more about the startup loan scheme, visit Gov.uk.