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Starting an online business with a Start Up Loan: what your plan needs to show

You can start an online business with a Start Up Loan. Here is what it typically pays for, and what your plan needs to show about margins and customers.

Reading time 5 min read
Category Business guides
Written by The bizbritain team
Yes, you can start an online business with a Start Up Loan. The loan can pay for stock, a website, equipment and advertising, as long as your plan shows how each cost helps the business. For an online shop, the plan also has to show two things. How will customers find you, and what do you keep from each sale after fees?

Section 01

Can you start an online business with a Start Up Loan?

Yes. The scheme treats an online shop like any other new business. What matters is you and the business, not where you sell.
You need to be 18 or over and live in the UK with the right to work here. The business must be UK-based and either not trading yet or trading for up to five years. You can borrow from £500 to £25,000, and you repay over one to five years.
It is a personal loan for business purposes, not a business loan. It is unsecured, so there is no deposit and no security to offer. You repay it personally, even if the shop does not work out.

Section 02

What a Start Up Loan typically pays for in an online shop

The loan can cover most of the costs of getting an online shop going. These are the four that come up most often.

  1. Your first stock

    The opening stock order, or the materials if you make what you sell. Your plan should say how much you will buy and how long it should take to sell.

  2. Your website

    Building the site, the domain, and the shop software. A marketplace shop has set-up costs too, such as photography and listings.

  3. Equipment

    A laptop, a camera, packing kit, or the tools you need to make your products.

  4. Advertising

    Paid adverts, social media promotion and samples. For most online shops, this is where the customers come from.

A few things cannot be funded. You cannot use the loan to pay off existing debts, to pay for training or education courses, or for investments that are not part of running the business. Our help page on what you can spend a Start Up Loan on has the full list.

Section 03

Your margin after platform fees

This is the part online sellers most often get wrong. The price a customer pays is not what you keep.
Say you sell a candle for £24, and it costs you £6 to make. Marketplace fees, card fees, postage and packaging could take another £9. That leaves £9 from each sale, before you pay for a single advert.
Now add advertising. If it costs you £5 in adverts to win each order, you keep £4. Your plan needs to show that number, because your adviser will look for it.
Myth 01

“If the website looks good, the customers will come”

They rarely do on their own. A new website has no visitors until something sends them there. That something is usually advertising, social media or a marketplace that already has shoppers.

Plan the money for finding customers as carefully as the money for stock.

So should you sell on a marketplace or on your own site? A marketplace brings shoppers but takes a fee on every sale. Your own site keeps more of each sale but has to find its own visitors. Many new sellers do both, and the plan can show both.

Section 04

What to put in your plan

Every Start Up Loan application needs three documents. These are a business plan, a personal survival budget and a 12-month cash flow forecast. For an online shop, make sure they answer these questions.
  • Who are your customers, and how will they find you?
  • What do you keep from each sale after fees, postage and advertising?
  • How much stock will you buy, and how quickly will it sell?
  • How will you cover your own living costs while sales build up?
You do not need to write any of this before you contact us. myplan builds all three documents by asking plain questions. The workbook takes around 30 minutes rather than days or weeks, and it is free for every bizbritain applicant.
Start with the eligibility check. It takes 60 seconds and involves no credit search. The formal application is different, because it includes a credit check, which is a hard search.
Once you apply, your bizbritain Business Advisor reviews the application in full. They assess it against the scheme's eligibility, affordability and viability requirements. Approved applications go to our finance partner, which runs its final checks, issues the loan agreement and provides the funds.
How long does it take? Most applicants are approved within one to two weeks of submitting a finished application. myplan shortens the preparation. Timing can still depend on any further information we ask for and on our finance partner's final checks.
When your plan is ready, find out more about applying through the Start Up Loans scheme with bizbritain.

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

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