The Start Up Loan at 7.5% fixed, and what it is really lending to
The government-backed Start Up Loan is one of the few UK facilities whose full pricing is published on a single page. The number that decides whether it suits you is not the rate. It is the product type.
A Start Up Loan costs 7.5% fixed on up to £25,000, repaid over 1 to 5 years, with no arrangement fee and no early repayment fee. All of that is on the front page of startuploans.co.uk, which is rare for UK business lending. The same page also says what matters more than the rate: the product is an unsecured personal loan. The borrower is you, not the business.
The published terms, as the front page lists them:
- Borrow up to £25,000
- Fixed interest rate of 7.5% per annum
- Repay over a term of 1 to 5 years
- "No fees for arranging the loan or paying it back early"
- Described as an unsecured personal loan
- Average loan size £10,264
Two of those lines do more work than the rest: the product type, and the absence of an early repayment fee.
It is a personal loan
The official description is "unsecured personal loan", and the product page adds that "The loan is unsecured, so there's no need to put forward any assets or guarantors to support an application." Read together, those two statements mean there is no charge over business assets and no guarantee for anyone to sign — not because the lender has waived it, but because the debt is already yours. It follows you whether or not the business trades, and no company structure sits between you and it.
For a pre-revenue business this is often the only structure on offer, and it is more transparent than a company facility with an uncapped director's guarantee attached: there is one borrower and one schedule, with nothing to negotiate about who stands behind whom. The fair comparison is therefore with personal borrowing of the same size, not with company borrowing.
No early repayment fee changes the arithmetic
Because the official product states that there is no fee for paying the loan back early, the term you choose sets the monthly payment you are committed to, not the interest you will finally pay. A five-year schedule can be cleared in three if the business does well; a one-year schedule cannot be stretched to five if it does not. That turns the choice of term into a cash-flow question: which monthly figure can your worst projected month carry? One detail the published page does not settle is how a partial overpayment is applied — whether it shortens the term or lowers the payment — and that is set by the loan agreement itself, so it is worth having in the agreement rather than in an email.
Here is the arithmetic on the average loan of £10,264, rounded to £10,000 for clarity, at 7.5% fixed on a normal monthly amortizing schedule.
| Term | Monthly payment | Total repaid | Total interest | How to read this |
|---|---|---|---|---|
| 1 year | £867.57 | £10,410.89 | £410.89 | Cheapest in interest, hardest on cash flow |
| 2 years | £450.00 | £10,799.90 | £799.90 | Doubling the term roughly doubles the interest |
| 3 years | £311.06 | £11,198.24 | £1,198.24 | Mid-point of the published range |
| 4 years | £241.79 | £11,605.87 | £1,605.87 | |
| 5 years | £200.38 | £12,022.77 | £2,022.77 | £1,612 more interest than the 1-year row buys £667 a month of breathing room |
The calculation, so you can redo it with your own figure: monthly rate is 0.075 ÷ 12 = 0.00625. Payment = P × 0.00625 ÷ (1 − 1.00625^−n), where n is the number of months. For P = £10,000 and n = 36, that is £10,000 × 0.00625 ÷ (1 − 1.00625^−36) = £311.06.
Total interest on £10,000 at 7.5% fixed, by term
Pounds of interest over the life of the loan, monthly amortizing schedule, 7.5% fixed. Because there is no early repayment fee, the five-year column is a ceiling rather than a commitment.
Source: Rate and term range from startuploans.co.uk, checked 20 August 2026. Interest figures calculated from those inputs.
What it will not do
The cap is £25,000 per person, and the average loan is £10,264. That is working capital and setup cost: stock, a deposit, early marketing, the first months of a wage. An acquisition, a fit-out or anything in six figures is outside what the product is sized for, and no amount of structuring makes it otherwise.
So what do you do
If you are pre-revenue or in your first year, the published 7.5% with no arrangement fee means the headline rate is close to the real cost, which is rarely true of what else is on offer at that stage. The decision left is the term, and the 1-year and 5-year rows above bracket it.
If you are an established limited company with filed accounts, a company facility is the comparison to run first. A personal loan taken when the company could borrow in its own name moves risk from the company to you, for no gain in price.
If you need more than £25,000, this covers one slice and the rest is priced separately. The cap is per person, with a lifetime ceiling of £100,000 for the business, and the application cannot be stretched past it.
If your business would struggle with £867 a month but not £200, the five-year row is the one to price: £1,612 of extra interest against £667 a month of headroom, on terms with no early repayment fee. Whether that trade is worth making depends on how firm your receipts are, which is a question about your figures rather than about the product.
Who should not take this
Anyone who would not take out a personal loan of the same size for the same purpose. The business framing does not change what happens if the business does not work: you owe the money personally, on a fixed schedule, for up to five years.
This page is part of business finance in the United Kingdom, where the rest of the UK material on this site is collected.
Sources
- Start Up Loans (British Business Bank) — up to £25,000, fixed 7.5% per annum, 1 to 5 year term, "No fees for arranging the loan or paying it back early", unsecured personal loan, average loan size £10,264. https://www.startuploans.co.uk/ (checked 20 August 2026)
- Start Up Loans, What is a Start Up Loan? — "The loan is unsecured, so there's no need to put forward any assets or guarantors to support an application." https://www.startuploans.co.uk/what-is-a-start-up-loan (checked 7 September 2026)
- Interest totals in the table and the figure are calculated from the published rate and term range using a standard monthly amortizing formula, shown in full above. They are our arithmetic, not a quotation from the lender.
- Start Up Loans, FAQs: The Loan — each individual can borrow £500 to £25,000, and a maximum of £100,000 may be lent to one business in its lifetime. https://www.startuploans.co.uk/faqs/the-loan (checked 13 October 2026)
Next step
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Open the cost toolWhat changed on this page
8 September 2026 New — The page used to say it could not confirm whether a Start Up Loan needs security or a guarantee. The official product page answers it: "The loan is unsecured, so there's no need to put forward any assets or guarantors to support an application." That does not change the more important point on the page, which is that the borrower is you.