Funding Your First Franchise: How Start Up Loans Can Help New Business Owners Get Off the Ground

Starting a new business is a big commitment - whether you’re launching a standalone venture or joining an established franchise network. Franchise models often come with clear operational guidance and brand recognition, but, like all business models, they still require a substantial upfront investment.

Franchise fees, equipment, initial marketing, insurance, and early working capital all need to be paid or provisioned for before you open your doors. For many new franchisees, this creates a financial hurdle: you need capital before you can generate any revenue.

Accessing traditional bank loan finance may not be the right option for you depending on your business proposition and circumstances. It can sometimes be a longer process and need more of your time to focus on it and complete it. Recognising this, the UK Government introduced the Start Up Loan Scheme in 2012 - a programme designed to support new entrepreneurs with accessible, affordable finance. Since its launch, the scheme has supported more than 136,000 loans issued to UK businesses, helping founders turn ideas into reality and giving independent businesses and franchisees alike a practical route to more easily accessible funding.

What Are Start Up Loans?

Start Up Loans are personal loans to an individual but they are designed specifically to fund new and developing businesses. They are delivered through the Start Up Loans Company nominated deliver partners, and monitored under the guidance of the British Business Bank who in turn answer to the Department for Business and Trade.

Start Up Loans are designed to be simple, supportive and accessible. There is no direct application fee however you may find some professional advisors will charge a modest fee to assist you with the process if you require it. This can be beneficial in helping to explain aspects of running a business that you may not already be aware of. You can apply whether you are launching a new business or have been trading for less than five years. The scheme can often provide additional benefits like up to 12 months of free mentoring, giving new business owners access to guidance during the crucial early stages of growth.

Who Can Apply?

The eligibility criteria are intentionally broad, making the scheme suitable for entrepreneurs across all sectors - including franchising. To apply, you must:

• Be 18 or over
• Have the right to live and work in the UK
• Be starting a business or have been trading for under 60 months
• Pass a personal credit check at a level that is acceptable to the scheme guidelines
• Provide a viable start up loan business plan, cashflow forecast and personal budget

The assessment focuses on the strength and viability of your business plan, not just your financial history. This makes Start Up Loans particularly valuable for first‑time business owners and franchisees who may not yet have any experience of running a business.

How Much Can You Borrow and What Are the Terms?

One of the biggest advantages of Start Up Loans is their flexibility. You can borrow:

• £500 to £25,000 per individual
• Up to 4 individuals can apply for one business allowing a potential investment of £100,000 per business

Loan terms include:

• 7.5% APR fixed interest rate
• 1 - 5 year repayment period
• No early repayment fees
• Personal loan

This structure can be especially helpful. The predictable monthly costs, and a fixed interest rate ensures repayments remain stable. The ability to borrow per director also means multi‑director franchise businesses can access higher levels of funding or split investment in proportion to shareholding.

What Can Start Up Loans Be Used For?

Start Up Loans must be used for legitimate business purposes. Common uses include:

• Equipment and machinery
• Premises or fit‑out costs
• Marketing and advertising
• Website development
• Recruitment and initial staffing
• Working capital to support early cashflow

For franchisees, this also means covering franchise fees along with other general elements like initial stock, uniforms, training, or early operational costs.

However, funds cannot be used for:

• Debt repayment
• Training that leads to a qualification
• Investment businesses

Your start up loan business plan and cashflow forecast must clearly demonstrate how the loan will support your business launch or growth and how you will meet the repayments.

What Information Do You Need to Apply?

The application process is structured but straightforward. You will need:

• Details on sales streams and revenues
• Cost of sales information
• Fixed costs
• A personal survival budget
• Three months of bank statements
• Proof of identity, address and right to work

Once you begin the application, you have 90 days to complete it. After this period, a new credit check is required.

How Long Does the Process Take?

Applications are reviewed by an adviser and then a second assessor. Decisions typically take around 2-4 weeks, depending on the complexity of your business model and the clarity of your documents. Once approved, funds can usually be released quickly, within 48 hours, allowing you to move forward with your business launch without unnecessary delays.

Is a Start Up Loan Right for You?

For many new franchisees, Start Up Loans offer a practical, affordable and supportive route to early‑stage finance. They provide predictable repayments, accessible criteria, and the added benefit of mentoring - all of which can make the transition into business ownership smoother.

If you’re preparing to launch a business or a franchise and need help with your business plan or financial forecast, we are here to support you through the process.

Ready to Begin?

Get in touch if you’d like expert support to discuss your business, in preparing your documents or exploring your all your funding options.

Alternatively, you can start your application here: www.gov.uk/apply-start-up-loan but make sure you are happy that you have completed the start up loan business plan correctly and have validated all the information within it. This will save you time in the process.