Start-Up Business Finance for UK SMEs
A company in its first year or two often needs money before it has the accounts to prove it can afford it. You might need a van, a machine, a fit-out or a few months of working capital, and your high street bank wants two years of filed accounts before it will even talk to you. The start up loan scheme is the government-backed product that aims to support new SMEs. It does this by offering a guarantee to the bank (not to you) that if the loan defaults, then the government will step in and make right a percentage of the banks loss
SMEmoney.co.uk is a platform that introduces businesses to finance. Our free tools and calculators help limited companies and LLPs borrowing for business purposes at any amount, and sole traders or small partnerships borrowing £25,000 or more for business purposes.
Government-Backed Start Up Loans
If you are an individual founder looking to borrow £25,000 or less, the government's Start Up Loans scheme may be worth looking at directly. It is run by the Start Up Loans Company, part of the British Business Bank, and offers unsecured personal loans for business purposes of £500 to £25,000 per individual.
Start up loans of up to £100,000 per business are available across its owners, so if there are 4 owners, they could in theory each borrow £25,000 repayable over one to five years. For applications from 6 April 2026 the fixed rate is 7.5%, and a business can apply for a first loan if it has been trading for up to 60 months. Applicants must be 18 or over, UK resident, able to pass credit and affordability checks, and must declare that they can't get finance elsewhere. Successful applicants receive 12 months of free mentoring. You can check eligibility and apply here
Choosing the Right Structure
Start-up finance covers three main structures: unsecured business loans for general spending, asset finance for equipment and vehicles, and merchant cash advances for businesses that take card payments. They differ in what the lender relies on for security, how repayments are collected, and what happens at the end of the agreement, so the right fit depends on what the money is for and how your business earns.
Other Options
Unsecured business loans
An unsecured loan gives the company a lump sum to spend on anything with a business purpose, from marketing to a first hire to working capital. Repayments are fixed and monthly over an agreed term, usually a few years. Because no asset secures the loan, the lender relies on the company's bank statements, the plan and the directors, and personal guarantees are common for younger companies. The trade-off is price: unsecured borrowing for a newer company typically costs more than secured finance, and the amount offered may be lower than you asked for until the company has more history.
Asset finance
Asset finance funds a specific item, such as a van, machinery, IT equipment or a commercial kitchen, with the asset itself as the lender's security. Hire purchase ends with the company owning the asset, while leasing lets you use it for a set term and then return, upgrade or extend.
Because the lender has something to recover, asset finance is often more accessible for a young company than unsecured borrowing, and rates through our partner platform start from around 5%, though a newer business is likely to be offered a higher rate. The limitation is that the money can only go on the asset, not on wages or stock.
Merchant cash advance
A merchant cash advance suits a business with regular card takings, such as a café, salon or shop. The provider advances a sum and takes a fixed percentage of your future card sales until it is repaid, so repayments fall in a quiet month and rise in a busy one. Lenders assess it on your card turnover rather than your accounts, which can help a company with a few months of steady trading. It usually needs some card sales history before a provider will look at it, and the total cost is often higher than a term loan, so it works best for short-term needs.
Always check with your accountant or financial advisor before entering into a commercial loan agreement.
The SMEmoney Process
Enquire: request a quote or apply through SMEmoney, giving as much detail as you have.
Secure handover: your details are passed securely to our funding partner.
Platform invite: you receive an invite to the funding platform.
Build your profile: you add more detail there, such as bank statements, your plan and what the money is for, and see the quotes and options that fit your profile, with more complete information giving more tailored results.
Specialist call: a funding specialist calls you to talk the options through properly.
Your decision: you decide whether to proceed, and your chosen application goes to the lender.
Completion: the lender gives full acceptance, documents are signed, and the funds or asset are paid out.
Frequently Asked Questions
What is SMEmoney? SMEmoney.co.uk is an introducer for businesses only. We are not a lender, not a broker, and not FCA authorised, and we pass your enquiry to our funding partner platform, which works with a wide range of lenders.
Who can SMEmoney help? Limited companies and LLPs borrowing for business purposes, at any amount, and sole traders or small partnerships borrowing £25,000 or more for business purposes.
How long does my company need to have been trading? It depends on the lender and product. Some lenders consider companies with only a few months of trading, while many prefer six to twelve months or more, and asset finance and merchant cash advances can sometimes be arranged earlier than unsecured loans.
Can a brand new company with no trading history get finance? It is harder, and options are narrower. Some asset finance lenders will consider a new company where the directors have strong personal credit and relevant experience, often with a larger deposit or a personal guarantee.
Will I need to give a personal guarantee? Often, yes. Lenders commonly ask directors of newer companies to guarantee the borrowing personally, which means your own assets could be at risk if the company doesn't repay.
How much does it cost? Terms vary by lender, product and profile. Asset finance rates through our partner platform start from around 5%, a newer or higher-risk business is likely to be offered a higher rate, and unsecured borrowing usually costs more than secured. The only way to get a proper rate is to apply so a lender can assess the strength of your business case.
Does it cost anything to use SMEmoney? No. Our calculators and introduction service are free to your business, we never charge an upfront fee, and we are paid by our funding partner.
What will lenders ask for? Typically recent business bank statements, details of the directors, what the money is for, and for younger companies a business plan and cash flow forecast. Having these ready usually speeds things up.
Can SMEmoney arrange a government Start Up Loan? No. Start Up Loans are personal loans to individuals of up to £25,000, which is outside what we can introduce. You can apply directly at startuploans.co.uk.
Will enquiring affect my credit score? Adding your details to the platform and seeing options is not the same as a full application. A lender may run a full credit search before approval, and the funding specialist can tell you when that will happen.
What if I'm declined? A decline from one lender doesn't mean every lender will say no, since criteria differ. It may also be worth waiting until the company has a longer trading record or putting down a larger deposit, and approval is never guaranteed.
