4 easy ways to get a business startup loan

If you wish to grow your business but are not sure how to fund it, a business startup loan may be the perfect solution to your problem. However, even if you know what can solve your problem, you sometimes are not sure about where to begin and what to do. This is why we are here to help you out.

This article will explain to you 4 easy ways in which you can get a business startup loan.

Understanding Business Startup Loans

Before applying for a business startup loan, it is crucial to understand what it is. A startup loan denotes the kind of personal loan that is subsidised by the government. This type of loan can be acquired by commercial organisations and companies that are willing to initiate or develop their businesses.

While some lenders charge an additional fee for early repayment and/or application, others may even provide the borrower with a year’s free assistance and various kinds of business offers.

Are you Eligible for a Business Startup Loan?

In order to obtain a business startup loan, you must:

  • Have the right to work in the UK
  • Be 18 years of age or over
  • Be a resident of the UK
  • Be trading a business that is UK-based
  • Be trading a business that has been running for a maximum of 24 months

If you qualify the above-mentioned criteria, then you are most likely to be suitable for acquiring a business startup loan.

While this criterion applies to a majority of the lenders, many companies may have more points to these that may include creditworthiness, business viability, personal affordability, etc.

Who offers Startup Loans?

Now that you know everything about business startup loan, it is time to find out who offers these kinds of loans.

Following is a list of types of lenders that provide businesses with startup loans:

  • The government
  • Members of the public
  • Hedge fund managers
  • Individual investors
  • High street banks

Depending on the kind of loan and the amount you wish to borrow, you may choose your lender.

How to get a Business Startup Loan?

You can borrow a business startup loan based on the amount you wish to borrow, the period, etc. Following are the 4 easy ways in which you can obtain this loan:

#1: Angel Investors

Angel investing is basically equity finance. When you apply for a loan through these investors, they will provide you with the amount you require in exchange for some equity in your business. These kinds of investors invest in both established businesses and start ups.

Although angel investors do not involve themselves in your business, they may limit the utilisation of the money you borrow. For instance, an angel investor may permit you to purchase equipment, but not allow you to use the money in the daily costs of the business.

The amount that you can borrow depends on three factors:

  • The amount your angel investor is willing to lend
  • The value of your business
  • How much equity you are ready to sacrifice

Pros of Angel Investors

  • You will not be required to make any repayment.
  • The loan will not cost your business at all.

Cons of Angel Investors

  • The ways in which you utilise the money may be restricted.
  • You will lose some equity in your business.

#2: Crowdfunding

Crowdfunding has become apparent in recent years developing into one of the most viable and prominent ways in which startup businesses can look for access to funding through their early stages of growth.

There are various types of crowdfunding:

  • Reward crowdfunding: Also referred to as a donation, in this type of crowdfunding, an individual is usually required to pitch their business idea online and offer rewards and perks to investors if their target of investment is met.
  • Equity Crowdfunding: The business owner is required to sell some equity in their business in exchange for investment.
  • Debt crowdfunding: The business owner borrows a certain amount of money at a fixed interest and repays it within a certain period.

Pros of Crowdfunding

  • Your business retains in the possession of the money.
  • You retain the ownership of your business.

Cons of Crowdfunding

  • There is not any guarantee that the project is funded.
  • You will have to offer incentives in order to attract investors.

#3: Business Credit Cards

Business credit cards provide a business owner with an affordable way of borrowing money when they are required to pay for their expenses fast.

Once the initial interest rate period has ended, the rate resets to a higher rate depending on the borrower’s creditworthiness and market.

Pros of Business Credit Cards

  • May get cashback and reward points on purchases
  • Insurance or protection on various other things like car rentals and travel purchases
  • 0% initial interest rates
  • Convenient and fast way for purchasing

Cons of Business Credit Cards

  • Not good for people who want lots of capital
  • High-interest rates after the initial periods end, hence, not suitable for long-term business financing

#4: Invoice Financing

Invoice financing refers to the process of selling an invoice that has been issued by a company to another for an amount that is less than the amount owed or that requires the fee payment. There are two types of invoice finance:

  • Invoice discounting: The issuer of the invoice is responsible for making sure that invoice recipients make the payments.
  • Invoice factoring: The individual who purchases the invoices is responsible for making sure that invoice recipients make the payments.

Pros of Invoice Financing

  • Resolves problems of cash flow that stem from unpaid invoices
  • Perfectly suitable for B2B (business to business) businesses

Cons of Invoice Financing

  • Not suitable for B2C (business to customer) business
  • Not suitable for business that does not invoice customers


A business startup loan may sound difficult to be obtained but is an easy process. Depending on the amount of money you want, the period, etc., you can choose your type of lender.

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