Get ready, £1bn in Start-Up Loans is up for grabs

In late July, the government unveiled its Small Business Plan, designed to fuel growth and strengthen protections for small enterprises. One of the headline measures includes a £4 billion pot of financing via Start-Up Loans, in addition to a crackdown on late payments.

Crucially, the funding isn’t just for existing firms; sole traders and new founders can also apply. But timing is everything if you want to avoid a surge in demand.

Robert Carter, Business Expert at Your Company Formations, says, “The government [s] actively fuelling growth through access to £1bn in Start-Up Loans. That’s a clear signal to founders: the climate is changing, but you have to move strategically to benefit.”

What’s in the Small Business Plan — and why it matters

Announced last month by the Small Business Commissioner (SBC), the plan outlines targeted measures to boost growth for small firms and sole traders. The most eye-catching is the £1bn funding injection, translating to 69,000 new Start-Up Loans for UK entrepreneurs.

Alongside funding, the plan aims to tackle one of the most persistent challenges for small businesses: late payments. The SBC will be given new powers to enforce 30-60 day payment terms.

As Carter explains, “This is the most meaningful intervention for small businesses we’ve seen in over two decades. Late payments have long been a quiet killer of UK startups. Cash flow dries up before they can scale.”

With such reforms on the table, sole traders with dreams of expansion should move quickly. This kind of opportunity hasn’t come around in over twenty years, so these loans will be popular, and waiting too long could mean encountering delays or missing out entirely.

How to apply — and boost your approval chances

The new Start-Up Loans offer up to £25,000 per founder, with payment terms of 1–5 years and mentoring support too. Run by the British Business Bank, the scheme is government-backed and relatively accessible. 

Sole traders are eligible, though having a formal business plan and being registered as a limited company will work in your favour, Carter says.

“This wave of support also signals the government’s renewed interest in accountable, structured startups. Proper company formation, including registered addresses, company secretaries, and director compliance, isn’t just admin. It’s increasingly a gateway to accessing government-backed finance and attracting investor interest,” he explains.

You can apply for a Start-Up Loan directly on the government’s portal. If you want to secure a loan, we advise getting ready now rather than later. 

For a broader overview of the current startup funding landscape, check out our guide to the small business grants you should have on your radar this year.