Following concerns from business groups that entrepreneurship is being stifled in the UK due to inaccessible loans, David Cameron has launched an £82.5 million StartUp Loan scheme for 18 to 24-year-olds.
The government hopes the loans will encourage more people to consider starting their own business, which is touted as key to the UK's economic recovery. And by targeting young people, the government hopes it'll go some way to tackling unemployment in the age group, which has hit more than 1m.
Starting a business might also offer a more credible alternative than going to university. The average loan is expected to be around £2,500, to be repaid within five years. School-leavers might find this more appealing than paying £9,000 a year for a university course. But unlike student loans, it'll have to be paid much quicker and the interest will be higher at the level of the Retail Prices Index plus 3%.
The StartUp Loans scheme is being speared by James Caan, the ex-Dragons Den panellist. Roland Rudd, founder of PR agency Finsbury, and Julie Meyer, founder of investment firm Ariadne Capital, will also give their support.
Alongside the announcement, a new enterprise review says Britain would have 900,000 more businesses if it had the same rate of entrepreneurship as the US. The review, by former Conservative minister Lord Young of Graffham, who also pioneered the StartUp scheme, said that 'many don't realise the opportunities that enterprise offers'. It's his first key role since he stepped down as the government's enterprise adviser in November 2010 after saying that 'Britons had never had it so good,' despite the recession.
David Cameron says he wants 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.'
But there has been some criticism from business leaders over the coalition's stance on entrepreneurship. Some say the government still isn't doing enough to help small and medium sized businesses get access to more funding.
Richard Branson told the Observer that the UK needs to get behind SMEs to generate growth, but they need more investment and finance from the big banks. 'The politicians talk of encouraging lending; we need action to match that rhetoric,' he said.