Partner Article

How the Government should boost start-up loan adoption

The Government has made good progress with the start-up loan scheme and we welcome many of the current initiatives it runs to foster Britain’s entrepreneurial spirit. It’s great to see it extended to the under 30s. Britain’s students and recent graduates are awash with new business ideas – we are specifically focussed on working with this demographic and they come to us day in, day out with high growth potential, revenue generating ideas. With the right guidance, support and financing options – the sky is the limit for these companies.

However, there has been a slow uptake in the start-up loan scheme and the Government may have to question whether there is enough appetite for it or whether the size of the loan is large enough. £2.5k realistically only provides finance for about 2 – 3 months or one small project.

To increase uptake of the initiative there are a number of things the Government could do:

• The first port of call for a new business tends to be the bank – the Government could work with the banks to market the initiative or partner with them and use the funding to subsidise bank loans.

• Another option, which would be more conducive to investors (who are often dis-inclined to invest in early stage businesses with debt) could be to look at equity investment or investment as loan stock - i.e. 15k for 15 percent of the company that can be bought at any time, by anyone, for the same cost of repaying the loan at 20 percent apr - it’s an option that warrants further exploration.

The Government should also look for ways to stimulate private investment in start-ups and create more opportunities for the private sector (including individuals) to get in and out of early-stage investments. It is this, in combination with these government led initiatives, that will harness the potential of Britain’s young entrepreneurs by providing them with the finance they need.

This was posted in Bdaily's Members' News section by Find Invest Grow .