Start Up Business Loans UK June 2025

When it comes to starting a new business, you may need funding to invest in your ideas. That’s exactly what start up business loans are for.  

But given the number of loans for start up companies on the market, finding the right start up loan for your business can feel daunting. That’s why we’ve done some of the legwork for you, so that you can compare start up business lenders, and have more time to focus on what matters: growing your business. 

Has your business been up and running for longer than a year? Our guide to the best small business loans may be better suited to you. 

Top 7 Best Business Start Up Loans

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Provider	NerdWallet’s Rating	Loan Amounts	Loan Terms	Representative APR
	4.4 / 5	£1,000 – £50,000	1 – 25 years	11.20% Representative Example	Check Eligibility Learn more
	4.2 / 5	£1,000 – £25,000	1 – 10 years	8.60% Representative Example	Learn more
	4.1 / 5	£1,000 – £100,000	1 – 10 years	9.90% Representative Example	Check Eligibility Learn more
	3.8 / 5	£5,000 – £500,000	3 – 12 months	Available on application Representative Example	Check Eligibility Learn more
	3.4 / 5	£1,000 – £10,000	1 day – 2 years	49.0% Representative Example	Check Eligibility Learn more
	3.3 / 5	£5,000 – £100,000	3 – 12 months	Available on application Representative Example	Check Eligibility Learn more
	3.1 / 5	£500 – £25,000	1 – 5 years	Available on application Representative Example	Check Eligibility Learn more

*This table is based on the loan with the shortest maximum term, and the lowest maximum borrowable amount, out of a lender’s product offering.

This top 7 only includes start up business loan providers reviewed by NerdWallet UK.

Best Business Loans for Start Up Businesses in Focus

Lloyds Bank Small Business Loan

4.4 NerdWallet's ratings

Representative APR
11.20%

Available Amounts
£1,000 – £50,000

Available Terms
1 – 25 years

Representative Example
11.20% APR representative based on a loan of £8,000 repayable over 60 months at an interest rate of 10.65% (fixed). Monthly repayment of £172.55. Total amount payable £10,353.00.

NerdWallet's Review Summary

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.

NerdWallet's Pros & Cons

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.

Check eligibility

NerdWallet has partnered with Funding Options. Check your eligibility with this lender and many others without affecting your credit score.

HSBC Small Business Loan

4.2 NerdWallet's ratings

Representative APR
8.60%

Available Amounts
£1,000 – £25,000

Available Terms
1 – 10 years

Representative Example
8.60% APR representative (fixed). Based on an assumed loan amount of £13,000 over 60 months at the AIR of 8.60% p.a (fixed). Monthly repayment £265.33. Total amount payable £15,919.83.

NerdWallet's Review Summary

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.
• HSBC Go Greener SME Reward: For business loans going towards environmental projects, business owners can qualify for cashback on the amount they borrow.

NerdWallet's Pros & Cons

Pros

• With HSBC, businesses can borrow up to £10,000 (HSBC Kinetic Small Business Loan), up to £25,000 (Small Business Loan) or up to £25 million (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 lenders on the market.

Barclays Unsecured Business Loan

4.1 NerdWallet's ratings

Representative APR
9.90%

Available Amounts
£1,000 – £100,000

Available Terms
1 – 10 years

Representative Example
9.90% APR representative based on a loan of £12,000 repayable over 72 months at an interest rate of 9.45% per annum (fixed). Monthly repayment of £219.00. Total amount payable £15,768.00.

NerdWallet's Review Summary

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, 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.

NerdWallet's Pros & Cons

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.

Check eligibility

NerdWallet has partnered with Funding Options. Check your eligibility with this lender and many others without affecting your credit score.

Fleximize Flexiloan Lite

3.8 NerdWallet's ratings

Representative APR
Available on application

Available Amounts
£5,000 – £500,000

Available Terms
3 – 12 months

Representative Example
Available on application

NerdWallet's Review Summary

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 access to secured business loans up to £500,000 and unsecured business loans up to £250,000. 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.

NerdWallet's Pros & Cons

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.

Check eligibility

NerdWallet has partnered with Funding Options. Check your eligibility with this lender and many others without affecting your credit score.

iwoca Flexi-Loan

3.4 NerdWallet's ratings

Representative APR
49.0%

Available Amounts
£1,000 – £10,000

Available Terms
1 day – 2 years

Representative Example
49% APR representative based on a loan of £10,000 for 12 months with an interest rate of 40% p.a. (variable). Total amount payable £12,294.

NerdWallet's Review Summary

iwoca gives businesses 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’s flagship small business loan is 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 £1 million with iwoca, start up borrowing is capped at £10,000.
• Short-term flexibility: You can pay back an iwoca Flexi-Loan over term lengths from one day to two years.
• Early repayment: You can overpay or settle early at any point with no fees.
• Not for sole traders: Only limited companies, limited liability partnerships and ordinary partnerships can apply for iwoca business loans.

NerdWallet's Pros & Cons

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’s Flexi-Loan 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.
• 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).

Check Eligibility

This product may be one of a range offered by this provider. Always check terms & conditions for suitability before applying.

Cubefunder Business Loan

3.3 NerdWallet's ratings

Representative APR
Available on application

Available Amounts
£5,000 – £100,000

Available Terms
3 – 12 months

Representative Example
Available on application

NerdWallet's Review Summary

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.

NerdWallet's Pros & Cons

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.

Check Eligibility

This product may be one of a range offered by this provider. Always check terms & conditions for suitability before applying.

British Business Bank Start Up Loan

3.1 NerdWallet's ratings

Representative APR
Available on application

Available Amounts
£500 – £25,000

Available Terms
1 – 5 years

Representative Example
Available on application

NerdWallet's Review Summary

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 £1.1 billion worth of loans to over 115,000 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. 

NerdWallet's Pros & Cons

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. 

Check Eligibility

This product may be one of a range offered by this provider. Always check terms & conditions for suitability before applying.

What is a start up business loan?

A start up loan is simply a loan which is suitable for new businesses – also known as start ups. 

Because start up businesses often struggle to secure funding – and because getting a new business off the ground can be a cash-intensive process – start up business loans can be lifelines for new enterprises. 

By taking on a business start up loan, a new venture can acquire the capital it needs to commence operations and generally get up and running. 

» MORE: What is a business loan?

What is a start up business?

A ‘start up business’ can be described as a young or new business, typically set up by one or more entrepreneurs and still in its first few years of operating. 

Am I eligible for a start up business loan?

To be eligible for a business start up loan, you’ll generally need to be at least 18 years old, a UK resident, and looking to start, or have a business that is based in the UK. Start up loans tend to be aimed at businesses that have been trading for three years or less, though this can differ between lenders. 

Your business plan and forecasts, your personal credit history and that of your business, and your business’ trading history, if it has any, are all likely to be considered as part of the start up loan eligibility process.  

What credit score is needed for a business start up loan?

In general, there is no one universal minimum credit score that either your business, or you, must have in order to get a start up business loan. 

If your business is up and running, and has a good credit score, this could improve your chances of being approved for a loan and may give you access to lower interest rates. 

However, if your business isn’t yet set up, is still finding its feet, or has some blemishes on its credit record, lenders may be more wary of lending money and want greater reassurance that you’ll be able to pay it back. In these instances, a check on your personal credit history is likely before you’ll be offered a start up business loan. It’s also possible you’ll be asked to provide security for the loan or a personal guarantee, where you promise to repay the loan from your personal assets if your business can’t.  

Do you need security for a start up business loan?

Many start up business loans are unsecured, meaning they don’t require an asset as security or collateral for the loan. This partly reflects the likelihood that newer start up businesses may not have suitable assets to put forward anyway. That said, some start up loans are available that do require collateral. Importantly, with secured business start up loans, there is always the risk the asset could be taken by the lender if you fail to keep up with loan repayments.  

» MORE: Unsecured business loans explained

What can start up business loans be used for?  

Funds borrowed through a start up business loan can be used for many reasons, such as: 

• Start up costs: including buying equipment, stock and premises
• Business growth: to launch new products and services, or buy another business
• Cashflow: to help cover short-term cash flow challenges, perhaps if your business is seasonal 
• Short-term overheads: such as your business’ utility bills and rent
• Employees: covering the cost of hiring, training and wages
• Marketing and advertising: to promote your business

Start ups often need funds to get off the ground, even if your business isn’t massively capital intensive. A lender is likely to ask what you intend to use the loan for, and you should be honest in your response. 

» MORE: Why do businesses need finance?

How to get a start up business loan

Applying for a business start up loan may be easier than you think. Just follow the steps below.

1. Decide how much you want to borrow and for how long. Once you’ve decided that a start up business loan is the right option for you, it is important to consider the balance between what you can afford and what you need to help grow your new business.

2. Compare start up business loans and lenders. Taking the time to shop around and compare business start up loans is important. Because lenders see more risk in lending to new unproven ventures, some may not lend to start ups. Research and weigh up the various terms, conditions, and qualifying criteria of different lenders to make sure you are eligible for funding and that a loan suits the needs of your business. 

3. Submit your application and all relevant documents. Be prepared to share details around the finances of your business, both past and projected, your business plans, how long you’ve been trading if you’re already up and running, and why you want a start up loan.

4. Wait to hear back. If you’re offered a start up loan, and you wish to proceed, you’ll need to sign the necessary agreement, perhaps provide any further evidence that may be required, and then wait for the funds to arrive.  

» MORE: How to get a business loan

How long does it take to get a start up business loan?

It may be possible to apply for a start up loan in minutes online and get the funds later that day, or a loan could take several weeks to arrange. Much depends on the lender, the type of loan you want, and your circumstances.

Start up business loan pros and cons

There are several benefits to business start up loans, but some potential drawbacks to bear in mind too. 

Advantages of business start up loans 

• The funds can be used to pay for equipment, premises, staff, and other things to help your business get off the ground or grow.  
• Many start up business loans are unsecured, avoiding the need to find an asset to put forward as security for the loan that your business may not yet have.  
• Provided you repay it in full and on time, taking out a start up loan could boost your business credit score.
• Using a business loan to fund your start up means you’ll retain ownership of the business, rather than giving away equity.

Disadvantages of business start up loans

• Like all loans, start up loans must be repaid with interest and often come with fees.
• Due to the risk associated with lending to new businesses, interest rates on start up loans can often be higher.
• Eligibility criteria can sometimes be strict, with some loans requiring businesses to have been trading for a certain period of time.    
• Some business start up loans will require an asset to be used as collateral for the loan, which a lender could take if repayments aren’t met.
• You may be required to provide a personal guarantee for some loans, which puts your personal assets at risk if loan repayments aren’t made.
• If you fail to meet the repayment terms of a loan, your business credit score may suffer.
• If you default on your start up loan, you may face additional charges.

» MORE: Advantages and disadvantages of small business loans 

How are start up loans different from standard business loans?

Start up loans and typical business loans share many similarities in how they work and their respective application processes. Essentially you apply to a lender for a loan amount and must repay it, plus interest, over the set loan term. Though it stands to reason that start up business loans should be accessible for businesses that are relatively new, or are yet to have started trading at all, whereas other business loans may not.  

Where there are differences, you may find that start up loans:

• Have higher interest rates, due to new businesses representing a greater risk to lenders
• Require you, as the business owner, to provide a personal guarantee, again reflecting the risk, but also the likelihood your business won’t have many assets the lender can rely on for security
• Allow smaller loan amounts compared with a standard business loan
• Involve a check on your personal credit history, due to your business being unlikely to have one.   

That said, you’ll find that many lenders don’t offer explicit start up business loans or make a distinction between start up loans and standard business loans.

» MORE: How do business loans work?

How much can you borrow with a business start up loan?

Depending on the lender, it may be possible to borrow as much as £500,000, or perhaps more, through a business start up loan. For smaller loans, the minimum you can borrow is around £500. 

How much you are allowed to borrow for your business mainly depends on the amount a lender thinks you can afford to repay. 

» MORE: Try our business loan calculator 

How long are start up business loan terms? 

Some start up loans are available over a term of up to 25 years. Or if you want to repay faster, the minimum term on start up business loans tends to be around three months, or sometimes shorter. 

Can a business start up loan be repaid early?

It should be possible to repay a start up business loan early. Some loans may allow this for free, but others will have an early repayment charge or interest penalty for doing so. Always check with your lender first. 

What happens if I can’t repay my start up business loan? 

Failing to keep up with your loan repayments may lead to missed or late repayment charges and higher interest rates. You also risk losing any business assets that may have been used as security for the loan, and you may have to pay out of your own assets if you provided a personal guarantee. Your credit score, and that of your business, could also be impacted negatively. 

It’s important to let your lender know or get professional advice if you’re ever struggling to keep up with repayments.      

Finding the right start up business loan for you

Choosing the best start up business loan for you is a must. Factors to compare include the interest rate on the loan, the amount you can borrow and any fees for taking out the loan.

Eligibility requirements are also relevant – especially for brand new enterprises. Check if there’s a minimum length of trading history required and other criteria. 

Key business start up loan questions

As a business owner wanting a start up loan, ask yourself the following questions:  

1. How much do I want to borrow?
2. When do I need to repay the loan?
3. How much can I afford to repay each month?
4. Am I struggling with unpaid invoices?
5. Do I hold equity in a property?
6. Do I need the loan to buy a specific valuable asset?
7. What’s my personal and business credit rating like?
8. How long has my business been operating?
9. Do I need a lump sum?

» MORE: Find a business loan to suit you

Government start up loans 

The Government-backed Start Up Loan scheme offers eligible applicants the opportunity to borrow between £500 and £25,000 to get their business off the ground or help it grow. The amount borrowed is repayable over a term of between one to five years, and there’s a fixed interest rate of 6% per annum. 

To qualify, you must be 18 or over, live in the UK, and have a UK-based business that has been trading for less than three years, or be looking to set one up. 

Importantly, the Start Up Loan is an unsecured personal loan, meaning it is your credit history that is checked rather than that of your business. 

These loans are offered by the British Business Bank through the Start-Up Loans Company. The British Business Bank also offers access to more conventional small business loans as part of the Growth Guarantee Scheme. 

What are the alternatives to a start up business loan?

Some other funding options you may want to consider if you’re unsure whether a start up business loan is right for you include:

Business overdrafts

Some banks offer access to a business overdraft: a short-term line of credit which can provide your business with greater financial flexibility. If you are faced with an unexpected cost, for example, then an overdraft could take pressure off your cash flow. 

Be warned that your business will be charged interest on the amount you are overdrawn, and you may also be charged a fee for using the overdraft. Your bank can demand that you repay the overdraft at any time.

If you ask your bank, you may be able to increase your overdraft amount. 

Business credit cards

A business credit card could provide your start up with greater financial flexibility, since they come with the option to spread the cost of your purchases. This can help with cash flow.

Business credit cards can also help to build your business credit score, and some lenders offer balance transfer credit cards, fee-free foreign use cards, or cards where you can earn reward points to further incentivise spending. 

Be mindful, however, that unless you pay off your business credit card in full each month, you will be charged interest and the cost of borrowing will be greater in the long term.

Merchant cash advances

Merchant cash advances are a funding option for businesses that take card payments. Unlike some small business loans or start up loans, firms can generally access merchant cash advances without needing to provide assets as security.

With a merchant cash advance, a lender will provide your business with an upfront sum of money – to cover a short-term shortfall or cashflow issue, for example. 

A percentage of your business card sales income will then be deducted daily, weekly, or monthly and be sent to the lender until the initial loan is repaid. Be warned that your business will be charged interest for a merchant cash advance and will also have to pay a fee for this service. 

Invoice finance

Invoice financing is a way of immediately releasing some of the money tied up in your unpaid invoices. 

With invoice financing, a lender will use your unpaid invoices as security for a loan, with some loan approvals taking less than 24 hours. This means invoice financing can provide quick access to up to 90% of the money you are owed by your customers or clients. 

There are different types of invoice financing arrangements, including invoice factoring (where the lender takes on the responsibility for managing your sales ledger and collecting payments from your customers) and invoice discounting (where your business keeps control of customer payments). 

Asset finance

Asset finance is a versatile source of funding which can be used to help cover the cost of business-critical assets. 

Through leasing or hire purchase, asset financing arrangements can ease the cashflow pressure on businesses by providing a way of spreading the cost of equipment acquisitions or upgrades. 

Just bear in mind that fees and interest payments are likely to apply if you use asset finance to finance the cost of buying assets for your start-up business.

Small business grants

The key difference between a grant and a loan is that a grant usually doesn’t have to be paid back. 

While small business grants can be very competitive – and may come with more stringent requirements or eligibility criteria than small business loans – it’s worth considering every option to fund your start up. 

There are many grants available to UK small businesses, some of which are available based on the sector, location, or age of your business.

Crowdfunding

If you’re looking to get a new business idea off the ground, then you might also want to consider running a crowdfunding campaign. 

Crowdfunding generally involves securing small amounts of funding from many sources – typically lots of individuals – who might choose to back a business idea in return for rewards, like early product access or equity in your business. Crowdfunding campaigns typically take place online through dedicated websites.

Angel investors

Angel investors are the largest source of investment in UK start ups and small businesses. Angel investors are typically successful or wealthy individuals looking to use their own money to invest in a young business in return for a minority stake. 

Think Dragon’s Den: many of the show’s ‘dragons’ are real-life angel investors. 

In addition to providing you with seed funding, an angel investor will generally take a hands-on approach to helping you grow your business – for example, by leaning on their own connections or mentoring you on your business journey. 

» MORE: How to get start up funding in the UK.

Start up business loans methodology

NerdWallet evaluated and reviewed 15 business loans providers (a mix of traditional and online-only lenders). Collectively, these represent the largest lenders by assets and internet search traffic, along with notable or emerging players in the industry.

We considered more than 10 data points for each account, based on the criteria that matter most to users, scoring them on flexibility of term-length, customer service, and amounts borrowable, among other factors. This information was gathered from each financial institution’s website and company representatives. In addition, we regularly add new brands and our editorial team reviews them against the same criteria for consistency and accuracy. 

Using the same data across all products and features we were able to create star ratings on a scale of one to five stars, where a one-star score represents ‘poor’ and a five-star score represents ‘excellent’. Please read more on our business loans methodology.

About the Authors

George Harrison

George Harrison is a lead writer at NerdWallet. A graduate of the London School of Economics, George has worked as a professional writer for almost a decade, with articles appearing…

Read more about George Harrison and explore their articles

Tim Leonard

Tim is a lead writer at NerdWallet and holds the Chartered Insurance Institute (CII) Level 3 Certificate in Mortgage Advice. He has over 20 years’ experience writing about almost all…

Read more about Tim Leonard and explore their articles

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