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Start up loans – a timely reminder?

Given the cash flow issues facing a number of businesses as a result of Covid-19 and the widely reported issues that prevent start-ups businesses from accessing debt through either CBILS or BBLS, I enquired on whether SWIG Finance had been seeing many enquiries for Start Up Loans the response was “Yes we are getting a lot of enquiries – in fact we approved a record amount of Start Up Loans last month – a blog would be great.”

So here is a quick reminder on the basics of the Start Up Loans:

Background

The Start Up Loans programme is funded by the Department for Business, Energy and Industrial Strategy (BEIS) and is delivered by The Start Up Loans Company (SULCo), a subsidiary of the British Business Bank;

The loans

The programme offers loans:

  • £500 to £25,000, at 6% interest
  • 1 to 5 year repayment term
  • Free mentoring and support

Eligibility

The money is lent to an individual either a sole trader, partner or a director in a limited company.

Individuals who are starting a new business or who have been trading for less than two years (see further below) providing that they are:

  • 18 years or over
  • Unable to secure finance from other sources (self-declaration is ok)
  • Are UK resident and the business is based in the UK
  • Pass credit checks and can afford to repay the loan

In a partnership / limited company, where there is a business need, multiple business partners/ directors can individually apply for a Start Up Loan of up to £25,000 – up to a maximum of £100,000 to any one business. Each partner’s application will be assessed separately, and if successful, each individual will be personally liable for their loan.

You are still eligible to apply for a Start Up Loan if you are purchasing an existing business, even if that business has been trading for more than two years under different ownership, provided you personally have not owned the business for more than two years.

Eligible business types

Most business types are eligible to be funded with a Start Up Loan, however we are not able to support the following business types:

  • Weapons
  • Chemical manufacture
  • Pornography
  • Drugs
  • Illegal activities
  • Banking and money transfer services
  • Private investigators that do not hold the appropriate licence
  • Gambling and betting activities
  • Property investment
  • Agents for third parties, where a third party earns the majority of the revenue or you would only be earning a commission (not to be confused with franchise businesses which are eligible to apply)
  • Charities

Excluded loan purposes

Start Up Loans are designed to finance the initial costs of starting and developing a business, and therefore cannot be used to fund the following activities:

  • Debt repayment
  • Training, qualifications or education programmes
  • Investment opportunities that do not form part of an on-going sustainable business

More details and how to apply

More details and information on how to apply for a Start Up Loan can be found at https://www.startuploans.co.uk/ together with a drop down menu to see who is a Start Up Loan Delivery Partner in your region.

If you have any questions or would like to talk to us about starting a business, please do not hesitate to get in touch.

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