Summary
- A startup business loan helps businesses receive the funding they need to grow.
- To be eligible the business owner must be over 18; the business is a limited company based in the UK; the business must have been trading for less than 24 months.
- Startups can apply for a loan between £1,000 – £500,000 online via the For Kredit online application.
- Interest rates vary between 2% – 6% and repayment terms are between 1 – 24 months.
- If approved, money can be transferred into your account in a matter of minutes.
What is a startup business loan?
A startup business loan is a form of finance which is designed with new businesses in mind. It aims to help businesses that have recently started trading to raise capital to help their new business grow and develop.
What types of startup business loans are there?
There are quite a few different startup loan products on the market, with many different providers offering unique startup funding options. This is because it can be difficult for startups to secure funding due to a lack of trading history. Below are some options that startup businesses may consider when looking to raise capital.
Startup business loans
A startup business loan is a typical unsecured loan that can be acquired via going to an accredited lender, broker or bank. In general, a startup loan works like any regular business loan. A borrower applies for a specific loan amount and is expected to repay the loan in monthly instalments in addition to a pre-agreed interest rate. A stipulation of a startup business loan is that it might charge more interest than businesses that have traded for a longer period of time.
Grants
UK Government grants are an option for startup companies that are looking to raise capital without borrowing money. New businesses are able to apply for a startup business grant by exploring the government website. A consequence of applying for a grant is that there are a number of application processes a business needs to go through to receive funding, which can make the application process particularly lengthy.
Crowdfunding
Crowdfunding is a way in which startups help raise money for their business. Startups that opt for crowdfunding utilise online platforms that are designed to attract a large audience to voluntarily invest. The investments are typically rewarded uniquely, whether that’s shop discount, merchandise, or early access to a product.
How can I apply for a startup business loan?
Startup businesses can apply for a startup business loan online via the For Kredit website. The online application has been designed so that it can be completed and submitted in a matter of minutes. It is compatible with mobile and desktop devices, so business owners can apply where it is most convenient.
How much can I borrow with a startup business loan?
Startup businesses can borrow anywhere between £1,000 – £500,000 when they apply for business funding with For Kredit.
Am I eligible for a startup business loan?
In order for your startup business to be considered eligible for startup funding, it must meet the following criteria:
- The business owner must be over 18 years of age.
- The business must be based in the UK.
- The business is a limited company.
- The business must have been trading for less than 24 months.
What are the repayment terms of a startup loan?
The maximum amount of time a business can have to repay the loan is 24 months. There are no fees if a business chooses to repay the loan early. Interest rates vary between 2% – 6%, interest is only charged each day that the business has not repaid the funding.
What are the benefits of a startup business loan?
Specifically designed
Most startup loans are designed with startups in mind. In many cases startups find it tricky to secure funding, this is largely due to the fact that they have a very limited trading history.
Startup funding products take this into consideration and provide an opportunity for new businesses to receive the funding that they need.
Quick funding solution
One of the benefits of applying for a startup loan with For Kredit is that we try to make the process from application to the funds being transferred as quickly as possible. This way it allows startups to receive funding as quickly as possible, making it an efficient method of borrowing.
Opportunity to help new businesses grow
One of the benefits of a startup business loan is that it is a useful way of raising capital for new businesses that are looking to expand. It can be useful for businesses that have found early success and a startup loan can help accommodate demand, whether that be new equipment or hiring more staff.
Why do businesses apply for a startup business loan?
Invest
Investment comes in many forms, whether it’s a structural investment, investing in new equipment, or investing in your employees – there are multiple ways a company can invest. A startup business loan can help new businesses to invest in their small business as they look to push their business forward.
Hiring
As startups grow, so does their demand. Often this requires new businesses to hire new employees so that demand can be met. A startup business loan can be used to help hire new employees, whether that’s to help with pay or to outsource hiring to a recruitment company.
Purchase Equipment
In some types of business, equipment is vital for generating business and operating from day to day. Startup loans can be used to invest in equipment for a number of industries, whether it’s construction, office equipment, kitchen equipment – the list goes on.
Location
In many cases, new businesses realise that they need to move out of the spare room, whether it’s for convenience or necessity. A startup business loan is able to help new businesses find a property that will allow their business to fully function in a space that suits their needs.
What is the difference between a startup business loan and a grant?
Startup loans and grants are both designed to help new businesses. However, they’re two different funding options. Below we’ve provided a brief overview of the differences between a startup loan and a grant.
Startup business loans
A startup business loan is often provided by lenders, brokers, and banks. The loan provides new businesses with an option to borrow money, but are required to repay the borrowed amount in monthly instalments including any variable or fixed interest rate which is attached. A startup business loan is often a much faster way to borrow money in comparison to a grant and there is greater flexibility on how the borrowed amount can be spent.
Grants for startups
Grants are typically provided by the government rather than via private companies. A grant allows new businesses to borrow money without having to repay any of the borrowed amount back. It’s a very desired form of financing for new businesses, primarily because there is no repayment needed.
However, startup grants are very difficult to apply for. The application process is often very drawn out and because grants are competitive this makes the application longer. Furthermore, Government grants require the business to use the grant more specifically which can sometimes limit what type of businesses can apply for this type of funding.
I have bad credit, will this affect my application?
The terms on the loan are typically based on the performance of the business rather than the credit history of the owner. Therefore, a business owner’s credit rating is not necessarily a major factor in determining the loan.
Credit checks will be undertaken to ensure that lending is undertaken responsibly and in line with the standards set by the Financial Conduct Authority. However, only soft checks will be used which will not affect the applicant’s credit rating.
What are the rates and fees on startup loans?
Interest rates on startup loans vary from 2% – 6% per month. Interest accrues on a daily basis which means that you only pay for each day you have the funds. For example, a business on a 3% monthly rate would only pay £1 per day for every £1,000 they had outstanding.
FAQs
How much money can I borrow with a startup business loan?
Startup businesses can borrow anywhere between £1,000 – £500,000 when they apply for a startup business loan with For Kredit.
How can I apply for a startup business loan?
New businesses seeking startup funding can apply online at For Kredit. It’s an online application only and takes minutes to complete. The online form is compatible with both mobile and desktop devices.
How long do I have to repay the startup business loan?
The maximum repayment period for a startup business loan is 24 months. Repayments are made in monthly instalments plus interest.