The government’s Start-Up Loans scheme has been back in the headlines in recent weeks, following Lord Young’s recommendation that they should no longer be subject to an age limit.
The scheme provides cheap loans to young entrepreneurs, and is a key part of the government’s strategy for growth. Start-Up Loans are currently only available to those between the age of 18 and 30, but if Lord Young’s recommendations are accepted, they could be extended to all age groups.
What are Start-Up Loans?
Start-Up Loans are government-backed finance for your entrepreneurs. The scheme currently has more than £100 million with which to finance new businesses run by those between the age of 18 and 30.
The Start-Up Loans programme has been gradually expanded over the course of its short life, and it is thought that the government will soon make more funds available. The money is being distributed as unsecured loans, administered by a number of delivery partners across the country.
Start-Up Loans are personal loans. In practice, this means that if you want to start a business in partnership with others, you may each be eligible for a loan. They are paid back over a maximum period of five years, and interest is charged at a fixed rate. This runs at 6 per cent at the time of writing.
What else does the scheme provide?
In addition to debt financing, the Start-Up Loans scheme offers a comprehensive mentoring process. When you apply for the scheme you will be paired with your local delivery partner, who will guide you through the application. If you don’t yet have a business plan, your delivery partner will help you put one together. Some partners also run intensive workshops to help you develop skills like cash-flow planning and budgeting. These can be a great way to get started if you do not have previous business experience.
Once you have received your loan you will then be assigned a mentor. This individual will provide ongoing guidance and assistance, answering your questions and ensuring that your business stands the best possible chance of success. In addition, businesses that are funded through Start-Up Loans are also eligible for discounted services from a range of ‘Global Partners’. These include cheap virtual offices, and free accounting software.
What are the eligibility criteria?
Start-Up Loans are currently only available to would-be entrepreneurs between the age of 18 and 30, living in England, although there are suggestions that the scheme could be extended in the near future.
Loans are available to proposed businesses and to those in the ‘start-up phase’ - that is, those without debt financing and in their early stages of development.
How can I apply?
Your first step is to register your interest directly through Start-Up Loans. In order to do this you will have to provide basic details such as your name and address, your employment status, and, if applicable, some basic information about your proposed business. Once you have done this, your details will be passed onto your local delivery partner, who will then get in touch about the next steps.
It is important to understand that the mentoring process is a compulsory element of the programme. It is important that you attend all of your mentoring sessions in order to maximise your chances of success in your funding application.
Start-Up Loans are not the only potential source of funding for your business. Read our comprehensive finance guide for more options.