Quick guide: start up loans
Start-up Loans are a scheme to help entrepreneurs fulfil their ambitions through funding and mentoring. Backed by the government and created by government enterprise advisor Lord Young, they aim to work closely with you to help develop your idea, business proposal and pitch.
Lord Young released a report on small businesses in 2012 which revealed that, with enough support, another 900,000 businesses could be set up. The loans are part of the government's attempts to reduce unemployment amongst the young.
Supported by Prime Minister David Cameron, the scheme is chaired by James Caan, who is best known for taking part on the Dragons' Den panel. He believes that "mentoring is as important, if not more important, than the loan itself".
How do I apply for a start up loan?
The first step is to fill in an application form. Members of the scheme will then assign you with the most appropriate Delivery Partner who will work closely with you to form a business plan, make sure your numbers stack up and ensure you have the confidence needed to pitch. If you pitch to the panel and are successful, you will receive a low-cost, unsecured loan as well as business mentoring and a range of business products. Your mentor will work with you every step of the way to ensure your business is successful. With their skills and expertise, they can give you the appropriate guidance and advice on what will work best for you.
How much can I borrow?
The average loan is said to be nearly £5.5k, which is required to be paid back over the course of five years with a fixed interest rate of 6%. Start-up Loans typically range from £2k to £10k and make a big difference to entrepreneurs wanting to buy equipment or stock, or simply fund the first few critical months.
While the scheme was initially only available to young people aged 18 to 30, it has now expanded and the age cap was lifted to any entrepreneur over the age of 18. They have also extended the programme - which was initially only available to people in England and Northern Ireland - to Wales as well, allowing Welsh entrepreneurs to also apply.
At the end of last year, Start-up Loans revealed that the male-female application split is 63%-37%. To date, they have lent nearly £70 million and backed nearly 14,000 businesses - helping to start around 30 businesses a day.