The British Business Bank has revealed that its Start Up Loans programme has delivered more than £750m of finance via 85,500 loans since its launch in 2012 - a significant milestone. Across the last year alone, the government-backed programme has issued £173m of loans to 11,408 people across the UK - a 33% increase on the same period in 2019/20.
For all its success though, you wouldn't be alone in thinking you've never heard of the programme and have no idea if you qualify and how to apply!
Here then, is a quick overview.
What is the Start Up Loan Programme?
The Start Up Loans Company was established in September 2012, with a mission to help new and early-stage UK businesses access affordable finance and mentoring support.
The programme is delivered through a national network of delivery partners based across England, Wales, Scotland and Northern Ireland. As well as helping loan applicants prepare their business plans and cash flow forecasts, the delivery partners are responsible for assessing final applications and providing ongoing mentoring support to those people whose applications are successful.
Who and what qualifies?
To qualify, your business must be based in the UK and you need to be a UK resident with a right to work here. You must also remain living in the UK for the duration of the loan.
You can apply when you start up or within 24 months of commencing trading. Loan funding can be used for a wide variety of start-up activities, but not for debt repayment or training and education programmes.
Most business activities qualify, but there are some exclusions including money transfer services and other FCA regulated activities.
Of the people who have received a loan since 2012, two fifths were women, one in five were from ethnic minorities, and 30% were unemployed when they applied for the loan, showing the scheme’s success in reaching diverse communities.
How much can I borrow, and at what cost?
You can borrow between £500 and £25,000 at a fixed interest rate of 6%. Loan repayment is between one and five years.
As an illustration:
A £5,000 loan repayable over two years would require repayments of £221.60 per month.
A £20,000 loan repayable over five years would require repayments of £386.66 per month.
Sharia compliant alternatives to paying interest charges are available and second loans are possible if your business still qualifies when applying.
How do I apply?
To apply, you must complete an application form. The British Business Bank then does a credit check and, if you pass, you will be assigned to a delivery partner. The delivery partner will help you prepare a business plan, cash flow forecast and personal survival budget, which all must be completed and submitted back to the British Business Bank within a 90-day window.
Can Productivity Finance help me?
We can. We can help you decide if the Start-Up Loan Programme is right for you and then support you with the application process.
We're sharing this information to help ambitious start-up businesses that we can't help in traditional ways.