Starting up
Start Up Loan or a grant? How to choose in 2026
Start Up Loan or a grant? The UK grants that exist for new businesses in 2026, how they compare with the scheme's 7.5% fixed loan, and when to use both.
A grant does not have to be repaid, but grants for new UK businesses are scarce, competitive and usually restricted to specific people, places or projects. A Start Up Loan is repayable, at 7.5% fixed, but it is national, predictable and open to most new businesses. Many founders end up using both.
Section 01
Start Up Loan or a grant? How they compare
- Repayment. A grant is not repaid. A Start Up Loan is, at 7.5% fixed over one to five years.
- Availability. Grants open and close, and most have narrow criteria. The scheme is open year-round, UK-wide, for £500 to £25,000 per founder.
- Speed. Grant competitions can take months to decide. A well-prepared loan application typically reaches approval in one to two weeks.
- Strings. Grants usually restrict what the money can fund, and many require match funding. The loan funds the plan you wrote.
- The extras. An approved Start Up Loan includes 12 months of free mentoring.
Section 02
What grants exist for new businesses in 2026?
Fewer than the internet suggests, but they are real:
- The King's Trust supports founders aged 18 to 30. Its published programme includes a Test My Business Idea grant of up to £500 and a Start Up Grant of up to £5,000, alongside its own enterprise course.
- Innovate UK runs grant competitions for innovation-led projects. Strong if you are genuinely building something new; not a fit for most everyday businesses.
- Local schemes. Councils, growth hubs and combined authorities run small, time-limited programmes. Worth a search for your area, with an eye on the closing date.
Notice the shape: small amounts, age limits, innovation tests, postcodes. A grant is a bonus where you fit the criteria. It is rarely a funding plan on its own.
Section 03
The honest trade-offs
Free money is better than cheap money, where you can actually get it. So check the grants you plausibly fit before borrowing. But be honest about odds and time. Chasing a six-month grant decision while your launch window closes can cost more than 7.5% ever would. Interest is a price. So is waiting.
Section 04
Using both together
The routes stack. A King's Trust grant can fund your test trading, with a Start Up Loan funding the launch proper. The scheme asks you to declare other finance, so name any grant in your plan. It strengthens the affordability case rather than weakening it. When you are ready to apply for a Start Up Loan, the 60-second eligibility check is the place to start. bizbritain is an FCA-authorised finance broker and a Start Up Loans Business Support Partner, with a panel of 100+ lenders. We help you build the plan once and use it for every application, grant or loan.
Comparing against a commercial business loan instead? Read Start Up Loan vs business loan.
This guide is general information, not financial advice. Applications are subject to status, affordability and lender criteria.
Read the guides · ready to apply?
Got a question the guide didn’t answer? Talk to an advisor.
We’ve backed thousands of British founders. If you’ve read the guide and you’re ready to find out what a Start Up Loan could do for your business, our advisors are on the phone now.