In this article, we explore how to get a start up loan, including our top tips and best practices for putting your application together.

Whether you’re only just considering turning your amazing idea into a start-up business, or have already begun the process, the reality is that you may need to raise some external finance to take your venture to the next level.

The Government-backed Start Up Loans scheme is an excellent option for those looking to secure start-up funding.

What is a Start Up Loan

Start Up Loans are personal loans for business purposes and are designed to help a business build its platforms and create a base for growth.

Loans range from £500 up to £25,000 repayable between 1-5 years, with a fixed interest rate of 6% and no other charges.

Start Up Loans are available to businesses that have been trading for less than three years and can also help new owners take over an existing business no matter how long it’s been trading.

Preparing for Your Start Up Loan Application

Before you begin your application, there are some key points to be considered.

Assets: If you need funding for essential assets you will need to research the associated costs and evidence this. Your research should include different options with pros and cons for each. You’ll need to provide a summary of why your chosen option is most suitable.

For instance, if you need specialist machinery, you may also need to research how much it will cost to run.

It will give you an advantage if you can articulate any savings you could make by using the equipment – for example, if you need specific software, could automation save you time and resource?

Premises: If your application is to help support premises costs, you will need to research premises and articulate how this will benefit your business’s mission.

For example, the location will be critical. Does your premises have the footfall you will need to sell your products or services? Does it have the storage facilities you may need for stock?

You will need to provide evidence that you understand the implications of taking on premises. For example, have you researched how much it will cost you to operate in bricks-and-mortar? How much will the buildings and contents insurance be? In addition, if you are likely to have customers visit your premises, do you need public liability insurance?

Market Research: Showing that you understand who your customers are is important for any business. You do this through market research.

Market research is a vital part of your business planning because it will help establish the demand for your product or service. Your market research should act as the foundations of your business plan and marketing strategy.

Will your business be ecommerce? If so, what sales channels will you use to reach your customers? What marketing tactics will your audience respond to? It’s a good idea to gather up a range of tactics.

Have you tested your idea with your customers? Test trading will give you a good idea of how your customers will respond to your product and marketing tactics. Above all, effective test trading will go a long way to show a lender that your venture is viable.

Qualifications: Are you qualified to run the business you are setting up? The qualifications needed will differ vastly from business to business.

For example, if your business is within the beauty sector, it is likely that you’ll need relevant qualifications before you can practice your chosen service.

If you need to undertake training to gain the level of experience you need to run your venture, are you prepared to do this? Do your costs factor this in?

Legalities: Similarly, it is critical that you consider legalities before you start trading to ensure that you are operating within the law.

Do you need specific licenses or permits to run your business, or are there any regulations you need to abide by? Similarly, have you got the appropriate insurances?

Legalities are perhaps the most essential consideration, and you can find a wealth of helpful information and top tips over at Start Up Loans Legal Tips.

For licencing and permit information, a good place to start is on the Governments Licence Finder.

Survival Plan: Although you’re planning to succeed, the reality is that lenders will need to see evidence that you have considered a backup plan.

How will you repay your loan if your business doesn’t generate the level of income that you anticipated? Do you have equipment you can sell, or can you create alternative income streams? Do you have a part-time job that you could fall back on? This all helps to formulate your Personal Survival Budget.

Putting Your Start Up Loan Application Together

If you’re at the stage where you feel you’re ready to apply for funding, you should be able to articulate why you need it, how it will be used, and how it will help your business to grow.

Before you apply, take a moment to reflect on the following: Is the purpose of the funding clear? Is the amount requested appropriate? Be mindful to only ask for what you need, as a lender will not want to over-fund any venture. Also, you will not want to make higher repayments than you need to.

Once you’re ready to take the next steps, visit the SWIG Finance website to start your application.

As part of your application, you will be required to submit a business plan, cashflow forecast and sales assumptions, and your Personal Survival Budget.

Start Up Loans have a range of templates to help you with these.

For some handy hints and top tips, please download our Start Up Loan Application Guide.

How can SWIG Finance Help?

SWIG Finance is the dedicated Start Up Loans Business Support Partner for the South West.

We have a team of experienced advisors on hand to guide you through the application process, including help with creating your business plan, cashflow forecast and personal survival budget.

To find out more about Start Up Loans, or to make an application, please visit our dedicated webpage.

Alternatively, you can contact us on 01872 227 932 or to arrange to speak with an advisor.

Representative Example: For a Start Up Loan of £10,000 repayable over 5 years. 60 monthly payments of £193.33. Rate of interest 6% per annum fixed. Representative APR 6.18%. The total amount of credit is £10,000. Total interest payable £1,599.80. The total cost of credit £1,599.80. The total amount payable is £11,599.80.