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Can a sole trader get a business loan in 2026?

Many self-employed people assume business finance is only for limited companies. It is not. Here is what a lender actually looks at.

Reading time 4 min read
Category Business guides
Written by The bizbritain team
If you work for yourself, you may have been told that business finance is for limited companies. It is not. Being a sole trader does not shut you out of a business loan. What matters is your plan, your numbers and whether you can repay, not the legal wrapper around the business.

Section 01

Your business structure is not the test

A Start Up Loan is a personal loan. According to Start Up Loans, it is a government-backed personal loan for individuals starting or growing a business in the UK. You borrow it, not your business.
So there is no company for anyone to look at, and none is needed. That is why sole traders can apply. Partnerships can too. Start Up Loans says that all owners or partners in a business can individually apply.
Myth 01

“I am not a limited company, so I cannot get a business loan”

Sole traders, partners and company directors are all people. A Start Up Loan is lent to a person, for a business purpose.

Your structure changes what your paperwork looks like. It does not decide whether you are allowed to apply.

The structure is not the barrier. The plan and the forecast are what get tested.

Section 02

What the loan is, in four numbers

According to Start Up Loans, the scheme lends £500 to £25,000 to each founder. The rate is fixed at 7.5% a year. The term is one to five years.
£500 to £25,000the amount one founder can borrow
7.5%fixed interest rate a year
1 to 5 yearsthe repayment term
60 monthsthe longest you can have been trading and still apply
A business with more than one founder can raise up to £100,000 in total. Each person applies separately, and each is responsible for their own loan.
That last point matters for sole traders. The loan is personal, so you are personally liable for repaying it. There is no company standing between you and the debt, because there is no company.

Section 03

What gets looked at instead

If the structure is not the test, what is? Four things, and you can prepare all of them.

  1. What the business does and who pays for it

    A lender wants to see the work, the customers and what the money is for. A sole trader with a book of regular clients is describing a real business.

  2. A cash flow forecast that repays the loan

    This is the document that does the most work. It shows, month by month, how the repayment gets made.

  3. Your personal credit history

    According to Start Up Loans, applicants pass a credit check and have to be able to afford the repayments. A thin file is not the same as a bad one.

  4. Whether you can raise the money elsewhere

    One of the scheme's published criteria is that you are unable to secure finance from other sources. It is a real test, so be ready to say what you have already tried.

Notice what is missing from that list. Nobody asks for filed accounts. According to Start Up Loans, the loan is unsecured, so there is no need to put forward any assets or guarantors to support an application.

Section 04

How to show cash flow when there is no company

This is where sole traders get stuck. There are no company accounts and no company bank statements. That is normal, and it is not a problem.
Use what you do have:
  • Bank statements that show money coming in from the work you already do.
  • Copies of invoices you have raised, with a note of which ones were paid late.
  • A month by month forecast for the next year.
  • A short note on what the loan buys, and what changes once you have it.
Put your own drawings in that forecast. A sole trader takes money out of the business to live on. A forecast that leaves that out will not survive a first read.
You do not have to build the forecast from a blank page. Our myplan tool asks plain questions about the business, then produces the plan and a 12-month cash flow forecast from your answers.
If your income moves around from month to month, show the range rather than an average. Seasonal work is common and lenders see it every day. What they cannot work with is a forecast that shows a flat line no real trade ever produces.

Section 05

Where a broker fits

bizbritain is a Start Up Loans Business Support Partner. That role is about preparation, not decisions. We help applicants get the business plan and the cash flow forecast right before they apply, and the scheme makes the lending decision.
If the scheme is not the right fit, there are other routes. A broker can look at the deal across a wider range of lenders. That helps when you have been trading for more than five years, or when you need more than the scheme lends. That is where growth finance fits.
If you want to know where you stand before you start, you can check your eligibility first.
Start. Grow. Buy.

This guide is general information, not financial advice. Applications are subject to status, affordability and lender criteria.

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