Prime Minister David Cameron has announced a boost to the Government’s Start-Up loans scheme, with funding being increased by £30 million to £110 million over three years.
The Prime Minister also said that due to demand from those who had just missed out on the scheme, and the challenges faced to secure loans to start a business, the age limit for applying will now be extended from 24 to 30 years old.
Start-Up Loans provide budding entrepreneurs a range of support to get their business idea off the ground, including access to a business mentor as well as funding in the region of £2,500.
More than 3,000 people have applied or registered an interest in a Start-Up loan; when their business plan is robust and approved, applicants are able to access the financial support, with a repayment period of up to five years.
In the three months that the scheme has been live over £1.5 million worth of loans have been approved, helping over 460 new businesses get off the ground. Around 100 new businesses a week are expected to reach approval stage in January, with thousands more in the months ahead.
The Start-Up Loans scheme forms a part of the Business in You campaign, which encourages the start up and growth of new businesses.
FSB Vice Chairman comments on expansion of start-up loans for young entrepreneurs
However one small business group urged the Government to focus on the ‘broken relationship’ between small businesses and banks following declining lending figures.
In December 2012 official figures showed that small business lending under the Government’s flagship scheme, the Enterprise Finance Guarantee (EFG), fell by around £160 million year-on-year, from around £461 million in 20110/11 to £301 million in 2011/12.
In September 2012 the Business Minister, Michael Fallon, wrote to the Chief Executives of the five main high street banks to encourage them to increase their use of the scheme, after the data showed that significantly fewer loans had been granted in 2012 compared to the previous year. In 2010/11 the figure was 4,685 while 2011/12 saw just 2,999 EFG loans to small business owners.
John Allan, Federation of Small Business Vice Chairman said: “By increasing the pot for start-up loans by £30 million to £110 million over the next three years, and the age range of those eligible from 24 to 30 in order to meet demand, the Government is moving in the right direction in addressing the gap in small business finance.
“But it needs to pick up the pace considerably and not lose focus on rebuilding the broken relationship between small businesses and banks.
“The Government is indeed acting on a number of fronts but failed initiatives, including Project Merlin’s lending targets, combined with the financial scandals of mis-selling and the manipulation of the inter-bank lending rate, have fuelled scepticism and a sense of alienation among small business owners.
“With the new Funding for Lending and Business Bank schemes in mind, 2013 must bring real results in reducing the cost of lending and boosting competition in order to free firms to create jobs and drive economic growth.
“Fewer than one in 10 firms responding to the FSB’s quarter four ‘Voice of Small Business’ index considered credit to be easily available. That is simply not good enough.”
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Susie Hughes © Shout99 2013