The Start-Up Loans scheme explainedBy Mark James
Mark James takes a look at the ins and outs of this exciting-sounding new scheme.
Perhaps feeling a degree of culpability over their role in the creation of a so-called ‘Lost Generation’, the Coalition has offered a pool of £82.5 million to Britain’s 18-24 year olds, keen to help young entrepreneurs on their way.
Ironically, one of the men behind the scheme is Lord Young of Graffham, responsible for a recession-based faux pas in 2010, about which he remarked;
For the vast majority of people in the country today, they have never had it so good since this so-called recession started.”
He clearly seems to have reassessed his opinion.
Calling on friends in high places, the Tories have managed to make £10 million available to Britain’s budding entrepreneurs this financial year, with the rest of the cash being injected over the space of three years.
Here’s an impartial overview of the nuts and bolts of the scheme...
How is this better than a normal loan?
Entrepreneurial young students or graduates can claim loans averaging £2,500 which are subject to a favourable 3% APR payback rate. Payback is required within 3 -5 years. RPI, meanwhile, remains fixed at 6% for the duration of the scheme.
All in all, it’s not a bad deal in comparison to the usual lending rates.
Do you get anything else with it?
Access to a business mentor is provided on top of the scheme, along with 6 months free access to the ‘Regus’ Virtual Office Package’. You’ll also receive a free copy of the Start-Up Loans kit, offering guidance on how to start a business, along with £500-worth of offers on various products. Business cards, websites and netbooks are amongst the goodies you can get your hands on.
Interesting...How do I get my hands on the loan?
You can apply by clicking on the Register tab on the Start-Up Loans Facebook page. There’s then an arduous wait, whilst Start Up Loans identify the right loan provider for you. Once that’s sorted, the loan provider then works with you to identify what stage you’re at in your idea process and they’ll then help you present your business proposal to a panel, where you will pitch for a loan.
This pitch appears like a Dragon’s Den scenario, which, if you impress, should ensure that you receive the funding for the loan. The loan will be administered by the loan provider directly and you can then set about your entrepreneurial business.
Ok, ok. What’s the catch?
Casting a cynical eye over the small print, you’ll see that the further £72.5 million investment is based upon the ‘success of the pilot scheme’. Worryingly, success in one regard is based on the ‘capability of the assorted support networks to engage and support loanees’.
Looking at this with a cold heart, it's debatable whether the mentors will have the time or energy to support an abundance of eager applicants. If you’re unrepentantly cynical (like me) the scheme could just be viewed as little more than lip service by politicians.
Still, I may be wrong. I’ve been wrong on a lot of things. This may prove to be just the shot in the arm our entrepreneurial youth needs.
No pressure, but much of the bourgeoisie expects you to bring us out of this economic crisis. Leading think tank The RSA certainly thinks so anyway, a recent report suggesting you’re meant to ‘help us navigate the period of economic transition we are entering’.
Better buck your ideas up kids and drag us out of this mess!
Visit the website for more details.
Mark James is an in-house writer for online accountancy firm Crunch. A former student freelancer he also contributes to freelance advice site http://www.freelanceadvisor.co.uk amongst a range of football sites. He misses his 9 hour weeks at Uni.