Funding a brand-new limited company is a different problem from funding an established one. You have no filed accounts, no repayment track record and no proven revenue, which is exactly the evidence lenders use to price risk. Yet a new company still needs money for a fit-out, a first vehicle, stock, equipment and the first few payrolls before the cash starts coming in.
This guide is written for the director of a new (or soon-to-be-incorporated) UK limited company. It covers the finance a company can borrow in its own name, the government scheme that is often confused with company borrowing, and how to improve your odds of approval. The single most important thing to understand first is that the best-known "start up loan" is not a company loan at all.
Company borrowers only. The finance introductions on this page are for UK limited companies and limited liability partnerships borrowing for business purposes. We introduce your company to a panel of commercial-finance brokers. We are not a lender and do not give regulated credit advice. If you are a sole trader, an individual, or borrowing for personal or household purposes, this service is not for you and you should speak to an FCA-authorised consumer-credit firm.
Funding options for a new limited company
When people search for a "startup business loan" they usually mean one of several very different products. Getting the label right matters, because it changes who lends, how much, and whether the debt sits with you or with the company.
- The government Start Up Loan. A personal loan to the individual, capped at £25,000. Not a company facility. Covered in detail below.
- Unsecured company loans. The company borrows in its own name, usually with a personal guarantee from the directors. Good for working capital with nothing to secure against.
- Asset finance. The company hire-purchases or leases a specific asset (van, machine, fit-out kit). The asset is the security, so this is often the easiest route from day one.
- Scheme-backed lending. Facilities where a government guarantee to the lender helps newer, thinner companies get approved.
- Grants and R&D relief. Non-repayable funding and tax claims that complement, rather than replace, borrowing.
Most new companies end up using a combination: asset finance for the kit, an unsecured facility for the working capital, and any grant they can win on top. The rest of this page walks through each in turn.
The government Start Up Loan explained (personal, not company)
The Start Up Loan scheme is run by the British Business Bank through accredited delivery partners. It is genuinely useful, but it is important to be precise about what it is, because the name misleads a lot of founders.
A Start Up Loan is a personal loan to you as an individual, not to your company. You apply in your own name, you are personally liable to repay it whatever happens to the business, the maximum is £25,000 per person (two co-founders can each apply, so a two-director business could raise up to £50,000 between them), and it comes unsecured with a fixed rate and twelve months of free mentoring. Because it is a personal, consumer-credit product, it sits with FCA-authorised delivery partners.
We do not introduce the Start Up Loan. It is a personal borrowing decision. If you want to explore it, apply directly through the British Business Bank Start Up Loans programme or a delivery partner. Some founders take a personal Start Up Loan and then lend the money into their company as a director's loan, but that is your own personal liability and your own decision, and it does not change the fact that the scheme is not company finance.
If you want your company to borrow in its own name, so that the debt is a company liability and the interest is a company cost, you need one of the company facilities below. That is what we introduce.
Unsecured company startup loans
An unsecured company loan is borrowed in the company's name with no asset pledged as security. For a startup, that means the lender is taking a view mainly on the directors, so expect a personal guarantee and a hard look at your personal credit files.
Typical startup unsecured facilities are modest until trading history builds, often in the £10,000 to £50,000 range, over one to five years, at rates that reflect the higher risk of a company with no accounts. Fintech and alternative lenders are usually more open to genuine startups than high-street banks, and they can move quickly, sometimes funding within a few days once the guarantee is signed.
Unsecured borrowing suits costs you cannot attach to an asset: marketing, first hires, initial stock, deposits and general working capital. If your need is a specific piece of kit, asset finance is almost always cheaper and easier, which is why the two are often stacked. For a fuller treatment of the guarantee and pricing mechanics, see our guide to unsecured business loans.
Asset finance for startups
Asset finance is frequently the single best route for a new company, because the lender's security is the asset itself rather than your trading history. That flips the risk equation. A brand-new company with no accounts can often hire-purchase a van or a machine on day one, where the same company would struggle to get an equivalent unsecured loan.
Under hire purchase the company pays a deposit and fixed instalments, then owns the asset at the end. Under a lease the company rents the asset over a term. Which is better depends on whether you want to own the asset and on the tax treatment, which is where capital allowances come in. A company that buys qualifying new plant or equipment (whether outright or on hire purchase) can generally claim 100% full expensing or the £1,000,000 Annual Investment Allowance in the year of purchase, turning the spend into an immediate corporation-tax deduction. We explain the buy-versus-lease and tax-timing decision in the asset finance guide, and the tax mechanics themselves sit with our tax pillars on full expensing and the Annual Investment Allowance. Note the main-pool writing-down allowance falls from 18% to 14% from April 2026, which nudges more startups towards claiming the full first-year reliefs where they can.
Worked example: a £40,000 fit-out and van
Take a new limited company opening its first premises. It needs roughly £40,000: about £25,000 for the shop fit-out and equipment, and about £15,000 for a used van. Compare the two ways of raising it.
| Route | What it funds | Ceiling | Whose debt | Security |
|---|---|---|---|---|
| Personal Start Up Loan | Any startup cost, but the money is yours personally | £25,000 per person | You, personally (personally liable) | Unsecured, personal |
| Company asset finance (van) | The £15,000 van, financed against itself | Sized to the asset | The company | The van |
| Company unsecured loan (fit-out) | The £25,000 fit-out and equipment | Set by directors' strength and plan | The company (with director guarantee) | None, plus personal guarantee |
The personal Start Up Loan tops out at £25,000 per founder and leaves the debt on your own name, so a single director cannot cover the full £40,000 with it and would still be personally on the hook. The company route scales: asset-finance the van (£15,000) against the van itself, and take an unsecured company facility for the £25,000 fit-out. The borrowing sits in the company, the van attracts capital allowances, and the two facilities together reach the full £40,000 without maxing out a personal product. That is the case for borrowing as a company rather than as an individual.
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Why startups struggle to borrow, and how to improve your odds
Lenders decline startups for one underlying reason: too little evidence to price the risk. Everything you can do to reduce that uncertainty improves your terms. The practical levers are:
- A credible business plan and forecasts. Realistic, not heroic. Show the cash cycle: when money goes out, when it comes in, and how repayments are covered.
- A clean director credit file. With no company history, your personal file carries the decision. Check it, correct errors, and clear obvious problems before applying.
- Some director investment. Money you have put in yourself signals commitment and reduces the lender's exposure.
- The right product. Choose asset-backed facilities where an asset can carry the risk, rather than asking an unsecured lender to take a pure bet on a new company.
- Scheme support. Facilities backed by the British Business Bank Growth Guarantee Scheme give the lender a government-backed guarantee, which can get a thinner company over the line. See our guide to the Growth Guarantee Scheme.
- Tidy paperwork. Incorporation details, up-to-date director information, and any early bank statements ready to go. Slow, incomplete applications get declined more often than they should.
Directors' personal guarantees
For almost any unsecured company borrowing by a startup, expect a personal guarantee. A personal guarantee is a director's written promise to repay the company's debt if the company itself cannot. With no trading history, it is how a lender gets comfortable lending to the company at all.
A guarantee does not turn the loan into your personal debt for accounting or tax purposes. The loan still sits in the company, and the interest is a company cost. But it does put your personal assets at risk if the company defaults, so treat it seriously: read the wording, check whether it is capped, understand whether it is joint and several with other directors, and consider guarantee-backed insurance. Asset finance sometimes needs only a lighter guarantee, because the financed asset can be repossessed, which is another reason it can suit cautious founders.
Alternatives: grants, R&D relief and finance once you are trading
Borrowing is not the only source of startup cash, and the cheapest money is money you do not repay.
Grants are non-repayable but competitive and usually tied to specific activity such as innovation, capital investment or job creation, and often to a region or sector. Start with the gov.uk business finance support finder and your local growth hub. Grants rarely fund general working capital, so most companies combine a grant with borrowing rather than relying on it.
R&D tax relief can return cash once you are trading, if your work involves a genuine advance in science or technology. It is a corporation-tax claim rather than upfront funding, so it helps later rather than at launch, but it is worth planning for from the start.
Once the company has been trading for a few months, more doors open. If you sell to other businesses on credit terms, invoice finance can release cash tied up in unpaid invoices, and a revolving credit facility can smooth lumpy cash flow. Those need a debtor book or some trading history, so they are a second-stage tool rather than a launch one. For the full menu of company debt, see our business loans guide.
How to apply
The application itself is straightforward once you know which product you are chasing. In order:
- Decide what the money is for. A specific asset points to asset finance. General working capital points to an unsecured facility. Both, in most startups.
- Get your evidence ready. Business plan, cash-flow forecast, incorporation details, director information, and any early bank statements.
- Check your personal credit files. They carry the decision when the company has no history.
- Confirm you are borrowing as a company. If the business is a limited company or LLP and the borrowing is in its name, the introduction is straightforward. If you are a sole trader or borrowing personally, that is consumer credit and you should approach an FCA-authorised firm instead.
- Get quotes from more than one lender. Startup pricing varies widely, and a broker panel that can compare asset finance, unsecured and scheme-backed options in one go usually beats going lender by lender.
Because interest on genuine business borrowing is generally deductible against corporation tax while capital repayments are not, it is worth having your accountant sanity-check the structure before you sign. Our corporation-tax guidance covers how the deduction and the marginal-relief band work. When you are ready, complete the form below and we will route your limited-company enquiry to the broker panel, and flag the accountant option if you also want the tax and structuring side reviewed.
External references: British Business Bank, Start Up Loans; British Business Bank, Growth Guarantee Scheme; gov.uk, finance and support for your business; Regulated Activities Order 2001 (SI 2001/544), including Article 36A; FCA PERG 17, credit-broking perimeter guidance; HMRC BIM45301, interest and finance-cost deductibility.