An £82.5 million StartUp Loan scheme is to be launched today that will give our next generation of entrepreneurs the finance and support to potentially start over 30 thousand new businesses, in a move to boost enterprise and economic growth.
Any young people aged 18-24 accessing the StartUp Loans can expect to receive expert and personal support to help develop a business plan and access training. Where the business plan is robust and approved, they will be able to access financial support in the form of a loan typically in the order of £2,500 with a repayment period of up to five years.
It comes on the day that Lord Young’s report on enterprise is published which shows that if we had the same rates of entrepreneurship as the US than we would have 900,000 more businesses in the UK. Lord Young sets out the strength, diversity and growth of small businesses in recent years, a clear contrast to the Bolton Report of 1971 which predicted small businesses were in long-term decline.
That with the internet and the support available from the government and private sector, it is now easier than it has ever been to start a business, quicker to grow and possible to sell globally from your front room.
Prime Minister David Cameron said:
I want this to be the year where people can think yes, I can do it, that we can get as many viable businesses as possible off the ground, that people can have a go, and that we see a whole new wave of entrepreneurs who start small but think big.
StartUp loans are a fantastic opportunity for young people, not only to get the financial support they need, but also to give them the confidence to believe they can do it, that they can turn that of an idea into the next global brand.
I would like to thank Lord Young for his thorough report into the SME sector. His enthusiasm, drive and tenacity to make sure we are doing everything we can to support business and promote enterprise is a credit to us all. There can be no better inspiration of the ‘can do’ spirit that is needed in business than Lord Young; and his report is a must read for anyone thinking of starting up.
Lord Young said:
Thirty years ago small businesses were in decline, now we have record numbers, with many tens of thousands starting each year, they are the engine room of our economy and critical to future economic growth.
But we cannot be complacent, now more than ever we have got to get behind our small businesses and encourage even more people to seize the opportunities and support that there is to start up on their own.
Many young people already have the drive and ambition to create a business, yet don’t know how to put this into action. My report will connect them to the support they need and the new StartUp Loan will mean that thousands of young people can now get access to advice and funding.
StartUp Loans will transform the enterprise potential of a new generation, just as the Enterprise Allowance Scheme transformed a generation in the 1980s.
Business and Enterprise Minister Mark Prisk said:
It is great news that we have so many young people in the UK looking to get into business and start their own enterprise. Giving young entrepreneurs the tools they need to start and grow a business is an essential part of boosting the UK economy.
By investing in young people now, we have a great chance of creating the entrepreneurs who can become tomorrow’s success stories. However, it is not just about money. It is about creating the whole package for young entrepreneurs, training, mentoring, business planning and help to access finance. StartUp Loans will help young people achieve all of these goals and give them an early and exciting chance to realise their personal and business potential.
StartUp loans will be administered by a range of organisations that have experience in working with young people, including the Prince’s Trust and Manchester-based Economic Solutions Group. These delivery partners will be responsible for providing start-up support, for assessing the business plan, for making the loan and for managing repayment.
James Caan, one of the UK’s best known entrepreneurs, has agreed to chair a new body to oversee the allocation of funds and to work with delivery partners to ensure the young people gain the maximum benefit from the support and finance on offer.
James Caan, Entrepreneur and Chairman for a new body responsible for StartUp Loans, said:
The StartUp Loans initiative provides guidance, access to expertise, and finance. These are the three vital ingredients for starting your own business. Armed with all of these, young people are already on the way to shaping their own future.
From today young people looking for support and finance through the StartUp loans can register at www.startuploans.co.uk or http://businessinyou.bis.gov.uk/ where they will receive regular updates and information, including on new delivery partners.
StartUp Britain will be working with a range of partners throughout the summer to raise awareness of this support, including a UK bus tour with business mentors on board, and events in towns and cities around the country.
Lord Young’s report
Lord Young’s report on enterprise sets out the enterprise landscape, and the considerable changes in the structure of business there has been over the last few decades. With the trend starting in the eighties with the break up of large firms and the growth of small firms, it has now been transformed by the internet. That this shift in the dynamic of how business is conducted is still evolving and that the influence of social media will become even more important in the world of business.
The report sets out why it is a great time to start a business, with a wide variety of support, advice and encouragement available from the public and private sectors. It includes a Guide aimed at people of all ages and background to offer them confidence and encouragement, including guidance on where to go to get help to make a sound business idea happen. This includes:
- a new Home Business Guide which provides clear guidance on setting up a business from home and tackling the myths on what rules are needed to be met. In 2010, almost 6 in 10 self employed people, approximately 2.3 million, said they were based at home. And 55 per cent of the newly self-employed said they worked from home
- a guide on the variety of ways to access finance including microfinance, StartUp Loans, crowdfunding and business angels including through, Finance Finder and a Finance Explained tool tounderstand and locate funding options by region, sector or purpose
- details on the public sector contracts that are available to SMEs through opportunities at www.contractsfinder.businesslink.gov.uk
- a new online search tool to locate incubation space and facilities at www.startupbritain.org/spaces
- a single source of guidance for firms looking to recruit staff www.businesslink.gov.uk/employ
Notes to editors
- StartUp Loans are designed for 18 to 24-year-olds who are interested in starting a business including those unemployed, in full time education or employment; starting a business or in the early stages of development - but are lacking access to the necessary finance or support to realise their ambitions.
- StartUp Loans will be supported with £10 million for a pilot scheme this financial year, with a further £32.5 million in 2013/14 and £40 million in 2014/15 being made available to grow the scheme, subject to the pilot demonstrating that there is demand from young people and capability within the support network to engage and support them. We will be looking to engage commercial partners to further build the lending pot.
- To administer the StartUp loans lending pot, the Government is creating a new body to provide guidance and direction. James Caan has agreed to chair this new body and has already recruited a team of many talents to bring real expertise to the delivery of the scheme. Board Members include John Spence, Roland Rudd, David Hutchinson, Duncan Cheatle, Julie Meyer, Bev James, Jonathan Jenkins and Philip King.
- Those who apply will get access to personal support with the most viable progressing on to formal business planning and mentor support. Where the business plan is robust and approved, they will be able to access financial support in the form of loan. The loan will typically be in the order of £2,500 - directly comparable with existing lenders in this area such as the Prince’s Trust - the longest permissible lending period will be 5 years. On average, we estimate that the loan period will be around 3 years but the decision on duration should be based upon the individual business plan. The interest rate will be at RPI plus 3%. Delivery partners will repay loans and interest back to a central fund, which can then build a revolving lending model. The StartUp loans will be available in England only.
- The launch of StartUp Loans and the publication of Lord Young’s report both form an integral part of the Business in You campaign with specific, targeted messages to 18-24 year olds http://businessinyou.bis.gov.uk/
- The StartUp Britain campaign is backed by Government but operates as a fully private sector supported venture. It was founded by eight individuals and business owners and is sponsored by AXA, Dell, Intel, Intuit, PayPal and X.commerce. Its role is to inspire, accelerate and celebrate entrepreneurship. www.startupbritain.org For more details on StartUp Britain contact Liz Slee at firstname.lastname@example.org or call on 07540 060112.
- The Rt Hon the Lord Young of Graffham PC DL graduated from University College London before becoming a solicitor. He spent a year in the profession before moving on to establish a number of successful businesses. He became Chairman of the Manpower Services Commission in 1982, entered the Cabinet in 1984, became Secretary of State for Employment in 1985 and in 1987 became Secretary of State for Trade and Industry and President of the Board of Trade. He was Executive Chairman of Cable and Wireless plc from 1990 to 1995 and thereafter Chairman of Young Associates Ltd, which invests in new technologies. Lord Young is an adviser to the Prime Minister on small business and enterprise.
- The Bolton report: Bolton J.E. (Chairman), Small Firms: Report of the committee of Inquiry on Small firms (1971).
Alan Kennedy, Director of Operations at youth charity The Prince’s Trust, said:
We know from our experience at The Prince’s Trust that supporting young people into self-employment can help turn their lives around. We’re really pleased to be a part of this initiative as it will enable us to help even more disadvantaged young people through our popular Enterprise Programme.
Richard Guy, Chief Executive, Economic Solutions Group, said:
Economic Solutions Group is delighted to have been invited by BIS and the StartUp Loan Company to engage with them as StartUp Loan Delivery Partners. We welcome the opportunity to work with vibrant young entrepreneurs and recognise the importance of startup finance to the successful development of a new business. Business Finance Solutions will lead the initiative on behalf of the Group, which will provide a joined-up approach to mentoring, business services and a wide rage of growth opportunities delivered by the Business Growth Hub and its partners.
StartUp Britain co-founder Emma Jones said:
We think there are a lot of enterprising young people out there who don’t even realise that setting up a business is an option, or that they’ve got the skills. If we can empower young people to set up on their own, it will be an extraordinary achievement.
- 2011/12 saw the highest level of company start-up since before the last recession; Companies House announced 450,000 newly registered companies in Great Britain
- in the UK, there are: 4.13 million self-employed people and 4.5 million small and medium sized businesses
- SMEs (especially the small number of high growth SMEs) are key to economic growth. 99.9% of the UK’s 4.5 million businesses are small or medium-sized, of which around 75% have no employees
- together, they [SMEs] contribute almost as much as large business to UK output (48.3% of GVA) and private sector turnover (48.8%). SMEs also account for almost 60% of private sector jobs (14 million)
- Barclays data estimates that in 2009, there were 37,100 start-ups by the under 25s, representing nine per cent of the total start-ups in that year in England and Wales (440,000)
- the 2010 Global Entrepreneurship Monitor evidence indicates that 4.9% of 18-24 year olds said they intended to start-up in the next 3 years; this equates to around 100,000 young people
- the Household Entrepreneurship Survey (2007) shows that a relatively high proportion (17%) of 18-24 year olds have recently thought about starting a business, buying into an existing business or becoming self-employed, compared to 11% for all age groups
- however, the conversion of these aspirations is much lower amongst young people, with just 6% of 18-24s in self-employment and owning a business, compared to 14% for the population as a whole
- the 2007 Household Entrepreneurship Survey also indicated that around 4% (250,000 ) of 16-24 year-olds had considered starting a business but had not due to financial reasons. According to GEM 2010, of those individuals who have not recently considered starting/buying a business or becoming self-employed, over half (53%) of 18-24 year olds cited obtaining business finance as a barrier to entrepreneurship, as opposed to 35% of those aged 25 and over
- the SME Finance Monitor provides some evidence that young people are more likely to be turned down for finance than older people: a lower proportion of those under 30 are immediately successful with their loan or overdraft applications than those over 30, while a higher proportion are not offered any financing - although these figures are subject to considerable uncertainty