Last week the Government announced that it is expanding the age range for eligibility for its start-up loans to 30 from a current cap of 24. The loans can be for up to £2,500.
Government funding for start-up loans will rise from £82m to £112m, although the scheme, which was announced at the end of May, has only lent out £1.5m so far. The target is to lend all £112m by April 2015.
However, in order to reach that target, almost 45,000 entrepreneurs will have to take out the loans, which seems something of a stretch, as so far only just over 3,000 entrepreneurs have applied, although the scheme has backed 460 businesses in the last three months and has a target of backing 100 businesses a week.
Making his announcement, Prime Minister David Cameron said there were record numbers of new companies starting and that the start-up scheme was “absolutely vital for the future”.
Mr Cameron also said that banks should also be doing more but that he is not content to sit back and wait for the banks to get on with plugging this gap in the market.
The start-up loans scheme, which is run by the Start-Up Loans Company, chaired by Dragons’ Den entrepreneur James Caan, has generally been welcomed by business groups, although there have been suggestions that the average of £2,500 on offer may not be enough to make a difference.
However, most of the entrepreneurs who have been helped feel that the most important part of the scheme is the advice and mentoring that they get along with the money.
Under the terms of the scheme, loans must be repaid within five years, and interest will be charged at the level of inflation measured by the Retail Prices Index (RPI), plus 3 per cent and RPI in November stood at 3 per cent.
Accountant, Jon Stocker, specialises in offering advice, support and guidance on matters involving personal tax planning, business decision-making and business start-ups.