When Lord Young announced the scheme he said that the UK might be home to 30,000 additional start ups and would have a resoundingly positive effect on economic growth.
The £82 million StartUp Loans Initiative for 18-24 year olds, typically totaling £2,500 per single application, will be re-payable within five years at an interest rate of Retail Prices Index plus 3%.
At the time of the announcement Prime Minister David Cameron said he wanted young people to have the confidence and support to turn “that spark of an idea into the next global brand”. It came as an enterprise review said the UK would have 900,000 more businesses if it had the same rate of entrepreneurship as the US.
The money offered as part of this scheme is deemed to be necessary – but is not being well received by current young entrepreneurs.
Rob Forkan, young entrepreneur and founder of home grown brand Gandys Flip Flops said; “The StartUp Loans Initiative, although better than nothing at all, is a band aid for a bullet wound. Like many government backed schemes, the expertise and guidance offered will not translate directly from paper to reality; which of course is little or no use to a struggling young entrepreneur”
He continues; “£2000 amounts to nothing in modern business terms and will likely end up squandered; the creation of 30,000 new entrepreneurs on that basis is total nonsense, amounting to yet another wasted opportunity courtesy of the government.”