Q – How much can I borrow?
Each individual can apply to borrow between £500 and £25,000 at any one time. Please note if multiple business partners are each applying for a loan for the same business, a maximum of £100,000 may be lent to that business in its lifetime which may impact upon the amount you are personally able to borrow.
Q – What is the average loan amount requested?
Our average loan size is between £5,000 and £10,000, but of course the final amount ultimately depends on the needs of individual, the type of business model and how you intend to use the money.
Q – Are there any fees involved in applying for a Start Up Loan?
No, there are no fees involved in either applying for or receiving a Start Up Loan, and no fees for the support we provide during and after the application process. Other than your monthly loan repayments, you will never be asked for any fees or other payments.
Q – Can I only apply for one Start Up Loan?
Every individual can only apply for a Start Up Loan for one business. However, if, after successfully securing a Start Up Loan, you later require additional funding in order to grow and develop that same business, you may be eligible to apply for a second Start Up Loan. You would need to go through a new application process and must have made at least six months of full loan repayments prior to applying. In addition, your total outstanding loan balance cannot exceed £25,000 at any one time. For example, if you initially borrowed £20,000 and since then, repaid £10,000, you may be eligible to borrow up to a further £15,000 (subject to meeting all other eligibility criteria).
To check your eligibility for a second Start Up Loan, please call Start Up Loans Client Services team on 0344 264 2600 for a short discussion about your business. Lines are open Monday to Friday from 9.00am – 5.30pm.
Q – Are there any rules around how I spend the money?
Start Up Loans are personal loans that are used to start a new business or grow an existing business that has been trading for less than 24 months. Your loan can be spent on a wide range of things related to your business, like equipment and stock, a premises, marketing and promotional expenses to name just a few. It’s important to note however that you must be able to describe your intentions for your loan within your business plan and cash flow forecast and explain how this will help you start and/or grow your business.
There are a number of activities that cannot be funded with a Start Up Loan, including debt repayment, training qualification and education programmes and hobbies or investment opportunities that do not form part of an on-going sustainable business.
Q – Why do you charge interest on the loan?
Start Up Loans is a government-backed scheme so all interest is reinvested in the scheme, meaning even more individuals and businesses can benefit from this affordable finance and support. At a fixed rate of 6% per annum, the interest is designed to be affordable compared to other mainstream lenders and the flexible loan term of one to five years gives our customers the ability to manage their monthly repayments in a way that makes most sense for them.
Q – Does The Start Up Loans Company have a Sharia compliant offer?
Yes. Although London Small Business Centre does not offer a Sharia compliant Start Up Loan itself, the Start Up Loan Company do offer a Sharia compliant finance product, which is independently administered through their Delivery Partner, Financing Sharia Enterprise.
Q – Who is eligible to apply for a Start Up Loan?
You are eligible to apply for a Start Up Loan if:
You are 18 years or older at the time of your application
Your business is or will be based in the UK – this means your business must be a UK registered company and/or registered in the UK for tax purposes. London Small Business Centre is an official Start Up Loan Delivery Partner for businesses based within London Boroughs.
Please note, businesses that primarily export goods or services overseas may still be eligible to apply provided the operational side of the business and the majority of revenue resides in the UK.
You are starting a new business or you have been trading for no longer than 24 months
You’re a current UK resident and will be for the duration of your proposed loan term
You have the right to be self-employed in the UK.
You are not currently bankrupt or on a Debt Relief Order (DRO), nor have you been discharged from one of these in the last two years
You do not currently have an outstanding Individual Voluntary Arrangement (IVA) or Trust Deed, nor have you been discharged from one of these in the last two years
You are not currently on a Debt Management Programme or Debt Arrangement scheme
Q – Can I apply for a Start Up Loan if I am currently bankrupt, on a Debt Relief Order (DRO) have an outstanding Individual Voluntary Arrangement (IVA) or Trust Deed, or am on a Debt Management Programme?
Unfortunately you are not eligible to apply for a Start Up Loan if you are currently bankrupt, or have been discharged from bankruptcy in the last two years. This also applies to individuals who currently are on a Debt Relief Order, have an outstanding Individual Voluntary Arrangement (IVA) or Trust Deed or are on a Debt Management Programme or on a Debt Arrangement Scheme.
London Small Business Centre is committed to lending responsibly and will not lend where doing so will further indebt the applicant. We would be able to reconsider your application once you have been discharged from any of these circumstances for more than two years. For those on a Debt Management Programme, you will be eligible to apply once you have repaid those debts in full.
Q – How do I know how long my business has been trading?
For the purposes of applying for a Start Up Loan, trading is defined as a business carrying out activities such as buying and selling goods, carrying on a trade or profession, providing services or be generating revenue on a consistent basis. If you don’t meet these criteria, then you are not likely to be classified as trading. Please note, if you have engaged in periods of ad hoc market testing or incurred expenses for non-revenue generating activities, these periods will not be included in your total trading time. Remember, to be eligible for a Start Up Loan, you cannot have been trading for more than 24 months.
Do you conduct credit checks?
As part of your application, a credit check will be carried out to help make a decision about whether we can lend to you. Any credit check carried out will leave a footprint on your file, which may be seen by other lenders. While a poor credit history will not prevent you from securing a loan in all instances, it is at London Small Business Centre’s discretion as to whether you are able to proceed with your application, based on your personal situation and our lending criteria. Please note, your consent will always be obtained before conducting a credit check.
Q – My business exports goods internationally. Am I still eligible to apply?
Yes, subject to three core factors.
Your business must be a UK registered company and/or registered in the UK for tax purposes.
The operational side of your business must be based in the UK.
The majority of revenue generated by your business must also reside in the UK.
Q – What is a credit check and why do you do this?
A credit check consists of information about your past and current financial behaviour. Banks, utility companies, mobile phone contract providers, insurers etc. all file the information relating to any accounts you may have had with them, and when a credit report is run it retrieves this information to give an overall snapshot of your repayment behaviour. As a responsible lender, we conduct credit checks in order to make sure our applicants can afford a Start Up Loan and to avoid increasing their financial indebtedness.
Q – Are all types of businesses eligible for a Start Up Loan?
Start Up Loans are designed to be used to start a new business or grow an existing business that has been trading for less than 24 months. While we can support most business types, there are a few that we are unable to support.
Q – I am on a visa, can I apply?
It depends on your visa. There are a range of visas that restrict an individual’s ability to work in the UK, whether based on sponsorship, number of hours or the right to be self-employed. The following visa types would exclude you from applying for a Start Up Loan:
Tier 1 visa (all categories)
Tier 2 visa (all categories)
Tier 4 (General) student visa
Tier 5 visa (temporary worker)
Domestic Workers on a Private Household visa
Representative of an Overseas Business visa
For the avoidance of doubt, individuals on an Ancestry Visa are eligible under the scheme, as are individuals with a visa with a restriction that states “no recourse to public funds” provided those restrictions do not fall under the above exclusions.
If you are unsure whether your visa is eligible under the scheme, please refer to the Government website for more information about your visa type or check with us.
Please note, if your visa type does fit our eligibility criteria, you will still be required to ensure that the loan term you request in your application will enable you to fully complete your loan repayments at least six months prior to the expiry of your visa. For example, if you are on a four year visa, then the maximum loan term we could offer you would be 3 years and 6 months as you would need to have fully repaid the loan six months before your visa expires.
Q – Can I apply for a Start Up Loan through the NEA scheme with London Small Business Centre?
London Small Business Centre cannot provide a Start Up Loan through the NEA scheme. If you are interested in an NEA Start Up Loan please speak to your local Jobcentre Plus who will be able to advise you on the eligibility criteria for NEA participants. They will also be able to refer you to a NEA Mentoring Provider.
APPLYING FOR A LOAN
Q – Can my business partner apply too?
Yes, multiple business partners for the same business can each individually apply for a Start Up Loan. We can lend a maximum of £100,000 to any one business, which means that up to four business partners can borrow a maximum of £25,000 each. Please note that all business partners must apply through the same Delivery Partner.
Q – Can I add my business partner to my application?
You can’t add your business partner to your application as all applicants need to individually apply, even if the money is being invested in the same business. This is because Start Up Loans are personal loans for business purposes, and therefore we run a variety of checks related to your individual ability to afford and pay back your loan. However, you can both supply the same business plan and cash-flow forecast as part of your applications.
Q – Does my business need to be registered with Companies House or HMRC before I can apply?
No, your business does not need to be registered with Companies House or HMRC in order to apply for a Start Up Loan.
Q – Can I apply for a loan if I’m currently on State benefits?
Being on State benefits does not necessarily exclude you from applying a Start Up Loan but we cannot provide individual guidance on state benefit entitlements. Please talk to your Job Centre Plus for information.
Q – Will applying for a Start Up Loan affect my state benefit entitlements?
Unfortunately we’re unable to give advice on state benefit entitlements. Please talk to your Job Centre Plus for information.
Q – Why won’t you lend to people who have certain credit issues?
London Small Business Centre are committed to being responsible lenders and it’s important to us that we don’t compound any existing credit issues that applicants may have by increasing their financial indebtedness.
Q – Can I apply for a loan if I have poor credit?
While your credit rating is not the only factor taken into account, London Small Business Centre are committed to lending responsibly, assessing based on affordability. Therefore, there are certain credit impairments where we cannot lend.
REPAYING YOUR LOAN
Q – If I pull out of the business or it ceases trading, do I still have to repay the loan?
Yes, a Start Up Loan is a personal loan that is used for business purposes and therefore you are personally liable for repaying the full loan amount and interest as per the Loan Agreement you signed, regardless of that status of your business or your position within it. The only time you can repay your loan without incurring any interest is during the 14-day cooling off period, directly after signing your Loan Agreement. During this period, if you decide you no longer want your loan you can return the funds and you won’t be liable for any of the interest you have accrued. Please refer to your Loan Agreement to confirm the details of your cooling off period.
Q – What should I do if I think I’m going to miss a loan repayment?
You should contact our Finance Partner, Business Financial Solutions (BFS) immediately and let them know your situation. It is always best that you speak to BFS if you believe you may not be able to make your next repayment rather than wait until the payment is missed. The contact details for BFS are:
Tel: 0161 245 4900
Q – What happens if I default on my loan repayments?
Our Finance Partner, Business Financial Solutions (BFS) follows standard market practice when loan repayments are missed and take a fair and reasonable approach. If you fail to make a payment they will attempt to contact you to determine the reasons for the payment being missed. They will also work with you to come to a reasonable and fair agreement about how you will address this and fulfil your obligations in the future. This will be followed up with an email and/or letter stating that a repayment(s) has been missed and outlining what needs to be done to remedy the situation.
If BFS are unable to contact you after repeated attempts, they may then look to recover the outstanding payments through various means such as, but not limited to, applying to issue a County Court Judgment (CCJ) or referring your case to an approved Debt Collection Agent.
The contact details for BFS are:
Tel: 0161 245 4900