Start-Up Loans scheme aiming to help thousands of more entrepreneurs in the North West region could see their business ideas brought to life after the government today announced a £30m boost to a start-up loan scheme fund.
Prime Minister David Cameron said more than £110m was now being committed to the project, fronted by Dragon’s Den star James Caan.
The Start-Up Loans scheme has been running since last July and aims to offer entrepreneurs finance of up to £10,000 at low-interest rates.
In the North West, it is delivered through Manchester-based Business Finance Solutions, which has so far received around 390 applications and granted 30 loans, with the typical value being around £2,500.
A further 90 North West entrepreneurs are in advanced talks about securing finance under the scheme and it is hoped up to £20 million of funding could be provided in the region over the next three years.
That is despite the fact just £1.5m of the initial £82m allocated to the initiative has been handed out across the UK since its launch.
Mr Cameron said: “Start-Up loans are an important part of my mission to back aspiration, and all those young people who want to work hard and get on in life, so this country competes and thrives in the global race.
“They are a great way to help this next generation of entrepreneurs get the financial help – and the confidence – to turn that spark of an idea, into a growing, thriving business.
“It is by backing our entrepreneurs and championing small business that we can drive forward and grow the economy, and equip this country for the highly competitive era we are in.”
When the Start-Up Loans Scheme was launched
The Start-Up Loans scheme was launched last year, with those securing finance also receiving mentoring support and help with business planning.
BFS was one of the first two organisations selected to deliver the scheme, along with the Prince’s Trust.
Start-Up Loans are provided for a maximum period of five years, with an interest rate of RPI plus three per cent. They are only available in England.
The scheme was originally given £82m of funding, with a further £30m allocated today.
Mr Cameron insisted the initiative was on target to issue more than 2,500 loans by March – despite criticism that only a few hundred have been finalised since it was formally launched.
But shadow business secretary Chuka Umunna said: “With our economy flat-lining, it’s essential that initiatives like the start-up loans scheme are delivered effectively if they are to provide real opportunities for our young entrepreneurs.
“That’s why it was disappointing that figures released at the end of last year suggested delivery of this scheme, like so many others from this Government, was not living up to David Cameron’s rhetoric.”
Paul Breen, who oversees the scheme for BFS in Manchester, said the scheme was ideal for entrepreneurs, especially those coming out of university, who are unable to access traditional sources of finance to get their businesses off the ground.
He added: “The message to entrepreneurs in the region is that if you have an idea, skills and the ability to run and grow your own business, there is now a funding product available for you.
“The funding may well be used alongside additional capital, be it from friends and family or savings, but what it will do is enable entrepreneurs to be able to pay for premises or equipment or even marketing materials to launch a product.”
The scheme is chaired by James Caan, who said: “There has been a major shift in the way business is viewed by the public, and entrepreneurs are now seen as creative and exciting role models, and I am delighted to see that more and more young people are now looking to set up their own business.”