David Cameron hopes an £80m loan fund for young entrepreneurs will lead to the creation of 30,000 start-up companies.
The £82.5m StartUp Loan scheme for 18 to 24-year-olds should help new businesses get off the ground, the prime minister said. He hopes the funding will create a “new wave” of enterprise to underpin much-needed economic growth.
Young people should have the confidence and support available so they can turn “that spark on an idea into the next global brand”, said Cameron.
Britain would have 900,000 additional companies if it had the same rate of entrepreneurship as seen in the US, according to a newly published enterprise review.
Former Conservative minister Lord Young of Graffham’s review found that “many don’t realise the opportunities that enterprise offers”.
The StartUp Loans will be repaid across a maximum of five years and will be subject to interest at the level of the Retail Prices Index plus three per cent. The typical loan is expected to be worth about £2,500.
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.”
The body overseeing the scheme will be chaired by Dragons’ Den star James Caan, who has invited Duncan Cheatle to join the board.
“A lot of people don’t have access to £2,500 to set up a company,” said Cheatle, who founded The Supper Club and Prelude Group.
“To some it is not a lot of money but if you look at the years of experience with entrepreneurs who have set up their own company, banks have not always been able to advance risk capital, and neither should they.”
While the StartUp Loans will not be a “silver bullet” for Britain’s entrepreneur scene, Cheatle believes the scheme will play an important role.
“The key is that it allows people who are thinking about setting up a business to buy stock and the immediate things they will need to get going.
“They will get the benefits of small capital to get going and a mentor with the wisdom and support to improve their chances of success.”
The loans will allow “people from a broad spectrum of backgrounds to start companies”, although Cheatle said some sectors would still be better-suited to other investment routes.
“It is less likely to support some sectors, such as things which need large capital.
“We don’t necessarily expect people to set up a biotech business with it. It is not aimed at people who need large amounts of capital – that would be for angel and other traditional investor routes.”
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