There has been a ton of rhetoric about how SMEs are the UK’s best route out of economic misery. But with bank-lending still stiflingly meagre and very few other ways available to raise finance, the government has decided to step in with more cash for aspiring business owners.
Today it announced that the scheme, which was originally aimed only at 18-24-year-olds, will now be expanded to include those up to the age of 30. In order to meet demand for the extended age range, the funding pool available for young entrepreneurs to tap into is rising from £82m to £112m. Sounds good, right?
Well, unfortunately, despite the scheme having been announced in May 2012, just £1.5m has been doled out in loans so far. The Start-up Loans Company, which is operating the initiative, claims that the sluggish launch is because of the time it takes to establish local partnerships so that the money can be lent out responsible.
The company says the pace of lending increased during December, and moreover, it has a target to get all of the £112m lent by mid-2015. Again, it sounds good, but it may be tougher to realise than officials are expecting. Around 3,000 people have applied for loans so far (and not all have them have been successful), but for the 2015 target to be met, 45,000 entrepreneurs will need to successfully secure a loan. It’s hard to know if this is overly ambitious.
Revealing the extension of the scheme, PM David 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’s worth noting that a sizeable chunk of ‘entrepreneurs’ who receive loans will become ‘self-employed’, neatly removing them from the dole queue…
Ubiquitous Dragon’s Den star James Caan, who chairs the Start-up Loans Company, said: ‘What is clear about the scheme is the take-up is there. We have had 3,000 applications and we have already backed 460 businesses in the last three months. We are looking to back 100 businesses a week.’
Here’s hoping 2013 will be the year the economy finally picks up, and that this loans scheme turns out to be more than political posturing…