Contributed by ACCA
To encourage young entrepreneurs to start businesses, the government has expanded its ‘start-up loan’ scheme.
The funding applies to individuals who are interested in starting a business or who have a business in its ‘initial phase’. While the amount of loan available remains unchanged at £2,500, the age range of applicants has changed and is now between age 18 and 30 (previously 18 to 24 years old). To support the increased age range the funding available has increased from £82m to £112m.
Launched in May 2012, by the end of December 2012 the scheme had lent only a fraction of its total fund: £1.5m to 3,000 applicants. The target is to lend the total fund amount by April 2015 and to benefit 45,000 applicants. The company responsible for start-up loans is chaired by James Caan.
The scheme was created by Lord Young and was seen as a way of reducing unemployment as well as creating an environment to encourage entrepreneurialism similar to that in the US. The expansion of the scheme was announced by David Cameron, who stated: ‘The government’s role has to be to try to do everything we can to encourage more start-ups and then to help them grow, to get finance and take people on.’
The loans must be repaid within five years with an interest rate of RPI plus 3%. The applicant must be an individual and the guidance states ‘when you apply through “start up loans” we will identify the right loan provider (delivery partner) for you, serving in your region. The delivery partner will then work with you to identify what stage you’re at in your idea process, and help you present your business proposal to a panel where you will pitch for a loan. If successful, you will receive the funding for the loan, which will be administered by the delivery partner directly. Mentoring will be provided with the loan and often during the pre-pitch process as well, giving you additional support and guidance as you go through an entrepreneur’s journey.’
Further details, the conditions and how to apply are available on the start up loans website.
Access to finance
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