Starting up

UK Start Up Loans 2026: The 7.5% rate, five-year rule and second-loan option most guides get wrong

Two rules changed on 6 April 2026, and most of the guides still ranking were written before that. Here is what the scheme itself says in 2026.

Reading time 6 min read

Category Business guides

Written by The bizbritain team

The UK Start Up Loan interest rate is 7.5% AIR (7.8% Representative APR), fixed for the full term. That rate has applied since 6 April 2026, when the trading limit also rose from 36 to 60 months.

Most of what you will read online about UK Start Up Loans is out of date. The fixed rate is 7.5%. Eligibility now stretches to five years of trading. And a second loan is available, on published conditions that most applicants never go looking for.

This is not another explanation of what a Start Up Loan is. It is the 2026 rules as the scheme itself states them, checked against Start Up Loans and the British Business Bank on 22 August 2026, with the routing question a broker would ask at the end. Where a guide you have read says something different, the date on it is usually the reason.

7.5%fixed rate a year, since 6 April 2026

60months of trading and you can still apply

£25,000maximum outstanding per individual

12months of free business mentoring included

Section 01

What actually changed in April 2026

Two things changed on 6 April 2026, and between them they make most older guides wrong on the two facts people care about most. The fixed interest rate went from 6% to 7.5% a year, and the maximum trading age went from 36 months to 60 months.

Myth 01

“The rate is 6%”

It was, from 2012 until 6 April 2026, which is why it is so deeply embedded in the guides, the forum answers and the comparison pages still ranking today. Start Up Loans describes the change as following a review of the product offering in light of economic and market changes.

The rate is 7.5% a year, fixed for the lifetime of the loan.

Myth 02

“You have to be in your first three years”

The 36-month limit was replaced with 60 months on the same date. If you were told you were too far along to apply, and you were told that before April, it is worth checking again.

A business trading up to five years can now apply.

Rates are set at the point you take the loan rather than moving afterwards. Applicants who passed a credit check before 6 April 2026 kept the 6% rate, with a window to complete. Everyone applying now is looking at 7.5%.

The scheme's published terms, as they stand: loans of £500 to £25,000 per applicant, terms of one to five years, a fixed rate of 7.5% a year, and no application or set-up fees. It is unsecured, so no assets or guarantors are required to support an application.

One point that is more than a technicality: a Start Up Loan is an unsecured personal loan for business use, not a business loan. The individual borrows it and the individual is liable for repaying it, whatever happens to the business. That distinction is the single most important thing on this page, and it is the one most often lost in summaries.

Section 02

The five-year trading rule and how it broadens eligibility

The old 36-month limit ruled out a large and slightly awkward group: businesses past the earliest scramble, trading for three or four years, too established for start-up funding and often still too young or too thin on filed accounts for mainstream commercial lending. The move to 60 months brings that group inside the scheme.

The number that matters is how long the business has been trading, measured in months, against a 60-month ceiling. This is one criterion among several, not the whole test. Start Up Loans applies its own assessment covering affordability and creditworthiness, and eligibility is not approval. Applications are subject to status, affordability and lender criteria.

Section 03

The second Start Up Loan, and what the scheme actually allows

A second loan is available to existing borrowers, and the conditions are published rather than hidden. The reason it feels like a secret is that almost nobody thinks to ask once the first loan is drawn.

Your first loan must have been drawn down at least six months ago.
The business must have been trading for at least three months and no more than 60 months.
All repayments must have been made on schedule for the three months before you apply.
A second loan is treated as a new application, and takes the interest rate applying at the date of that application.

Myth 03

“Co-founders can stack up to £50,000”

That figure is arithmetic on two people at the individual maximum, not a scheme limit, and stacking is not how the scheme describes it. Each eligible individual applies in their own name and is personally liable for their own loan.

An individual can hold a maximum of £25,000 outstanding across both loans combined, not £25,000 twice. If you borrowed £15,000 and have repaid £5,000, you have £10,000 outstanding and could apply for up to £15,000 more.

Separately, there is a £100,000 aggregate cap per business, covering everything you and your business partners have borrowed under the scheme between you.

Twelve months of free business mentoring is included, alongside support with the business plan and access to templates and guides. That is genuine value attached to the money and it is routinely left out of comparisons that look only at the rate.

Section 04

The routing test: Start Up Loan, Growth Guarantee Scheme, or commercial growth finance

A Start Up Loan is not automatically the right answer just because you qualify. Three questions usually settle it.

How long have you been trading, in months?
Past 60 months and the scheme is closed to you, whatever else is true. Count it properly before anything else, because it is the only question with a hard yes or no.
How much do you need?
The scheme tops out at £25,000 per individual. If the plan needs £80,000, the conversation is a different one and forcing it through this route just delays it.
Are you willing to be personally liable?
This is personal borrowing. For some founders that is an easy yes, and for others it is the whole decision.

Where the amount is the constraint, the Growth Guarantee Scheme is often the next thing to look at. It is a government guarantee that supports lending by accredited lenders rather than a loan you apply to directly, and the British Business Bank reports facilities of up to £2m per business group. In July 2026 the Chancellor announced an expansion of the scheme, raising the turnover eligibility ceiling from £45m to £54m and allowing term loan and asset finance facility terms of up to ten years, where the previous maximum was six.

Beyond both, there is ordinary commercial growth finance: term lending, asset finance, invoice facilities, and revolving working capital. The high-street banks cluster around a similar profile of applicant, and several alternative and specialist lenders will consider businesses well outside it, particularly where trading history is short. Knowing which of those doors fits your file is the part that is genuinely hard, and it is the part a broker does.

bizbritain is a finance broker. We do not issue Start Up Loans and we are not a lender.

Section 05

Before you apply

Step 1

Count your trading months

Against the 60-month ceiling, before anything else. It is the one criterion that closes the door outright.

Step 2

Decide the amount from the plan

Not from the maximum. A number you can explain is worth more in an application than a number you have rounded up to the cap.

Step 3

Be clear that this is personal borrowing

You repay it whatever the business does. If you already hold a Start Up Loan, check the six-month and three-month conditions above before assuming a second one is out.

If the business closed a year from now, could you still meet the repayments?

Step 4

Get your figures together

A business plan and forecast. The scheme provides templates and mentoring support for this.
Personal and business bank statements. Affordability is assessed on you, not only the business.
Whatever trading history exists. The same information supports an application to any of the routes above.

All scheme terms on this page were checked against Start Up Loans and the British Business Bank on 22 August 2026. Scheme rules change, and this one changed in April, so check the date on anything you read about it, this page included. Eligibility is not a guarantee of approval.

bizbritain is a Start Up Loans Business Support Partner. We help you prepare the business plan and cash flow forecast before you apply. If you are ready to look at your options, start with applying for a Start Up Loan.

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

Thinking about a second loan specifically? The three conditions and the £25,000 cap are in our guide to getting a second Start Up Loan.

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