How to get a startup loan

Every business founder should investigate whether a startup loan is right for them

Startup loans are a great way for a business to launch with a bang: worth up to £25,000 per company director, they are offered at a competitive rate of just 6 percent (at time of writing, January 2024) and often come with mentoring and professional advice.

If your business is less than three years old, you should consider this as a source of funding.

Let’s look at what you need to have in place to apply and how to maximise your chances of success.

Before you apply

Craft a solid business plan: a well-written business plan demonstrates your viability and seriousness to lenders. You’ll find plenty of resources and templates online to help you map out your business idea, market analysis, financial projections, and marketing strategy.

Assess your financial needs: it’s important to have a plan about how you will use the money. Show how much capital you need for things such as operations, equipment, inventory, and marketing. Overestimating can see you saddled with unnecessary debt, while underestimating can hold back your growth.

Boost your credit score: a strong personal and business credit history will stand you in good stead for future borrowing and indicates the general health of your business. Lenders (and potential future investors) consider your credit score to be a key indicator of your ability to manage finances responsibly.

Explore funding alternatives: Startup loans should be considered alongside other sources of funding such as personal savings, family and friends, crowdfunding, and professional investors. You may also wish to investigate grants which are awarded to businesses that solve particular problems (usually in research, innovation or sustainability).

Applying for the loan

Swoop can help you at every stage of the journey.

When you sign up to Swoop, open banking technology will save you hours of time by identifying products that are right for your business and automatically completing forms with securely shared information.

Lenders will typically want to see:

• your business plan
• your revenue
• your trading history (if you have any)
• your founders
• your projected earnings

Tips for maximising your chances of success

Swoop will help you access a network of lenders: Swoop’s specialists will take the time to understand your needs and guide you through the process.

Focus on your business’s unique selling proposition: remember to highlight your competitive advantage, and experienced team members.

Seek professional help: applications submitted with the support of an accountant will have a higher chance of success.

While the process of getting a startup loan can be slow and more restrictive than other types of business borrowing, they are still worth investigating as a new business owner because there are many positive aspects to these specific products: Government-backed startup loans require no security or personal guarantee, they may offer deferred repayments and providers will consider riskier businesses or ideas than most traditional lenders.
A startup loan may be just the thing to kickstart your new business, so check out our comprehensive guide to UK startup loans which will give you more information on the scheme.