Innovative young entrepreneurs have been hailed time and again as Britain’s great hope for bringing us out of recession.
It is hoped that these budding, creative, small and medium-sized businesses can accelerate the rebuilding job faced by the nation.
Until now, banks have been reluctant to lend to new customers without a strong track record, which has meant a real struggle for start-ups and developing small businesses. But now thanks to measures taken by the UK government, young entrepreneurs and small businesses will be given access to grants to facilitate setting up business in the right way and help them lead the way to economic recovery.
Cost cutting can mean corners are cut
Tough decisions have to be made with any new business venture, which can lead to confusion over which expenditure is essential, and which isn’t. Important costs for protecting a new company, such as business insurance, can be overlooked when faced with a pile of urgent bills or other financial pressures.
£82m government fund
However the new scheme, announced by David Cameron in late May, has the potential to help start-ups start off in the right way, including putting in place cover such as public liability insurance or professional indemnity insurance – allowing entrepreneurs to protect their business right from the get-go, and to focus on growing their businesses.
The scheme has proposed £82m of loans for young people aged between 18 and 24, who would typically struggle to get a loan from a bank.
Each of these loans can be up to around £2,500. The loan would have to be repaid within five years, with interest charged at current RPI (Retail Prices Index) plus an additional 3%. According to industry experts this is a reasonable rate compared to what is normally available on the high street for small businesses.
Potential for 30,000 start-ups
The Prime Minister said that he hopes as many as 30,000 start-ups could emerge as a result of the fund, which should provide a much-needed boost to Britain’s struggling economy.
This is important because historically when it has come to small and medium-sized businesses, the banks have proven reluctant to assist. “A bank would not give it to a young person without any track record,” said Lord Young.
This scheme offers more than just money. Mentorship is also on offer: advice and guidance on what steps to take when setting up a business, such as office costs, employee issues and advice on accounting and business insurance.
“Many don’t realise the opportunity that enterprise offers,” said the review into UK entrepreneurship, which has led to the creation of the £82m fund.