The Start-Up Loans Scheme, which provides 18-24 year old entrepreneurs with initial capital, has distributed the first wave of cash from its £82.5m reserves.
The Scheme has designed to help younger people who are interested in starting up a new business, but do not have access to sufficient funds to get their ideas off the ground. Around 1,200 people have expressed an interest in applying for a loan.
The initial £10m, which was made available via a pilot scheme this year, will be supplemented with a further £32.5m in the 2013/14 tax year, and £40m in 2014/15.
How does the scheme work?
Before a prospective entrepreneur can access capital, they will first be provided with personal support, including mentoring and business planning. Once an applicant has submitted a “robust” and approved business plan, they will be eligible for a loan, typically of around £2,500 (a similar sum to that offered by The Prince’s Trust and other organisations).
The loans, which are offered in England only, will be available for up to 5 years, with 3 years being an average repayment term. The interest rate is RPI + 3%.
The Scheme itself will be administered by a new Government body, chaired by James Caan.
A number of service providers will be working alongside the Start-Up Loans Scheme administrators to provide support. Some of these organisations include; Young Britain, South West Investment Group, Let’s Do Business, and The Prince’s Trust itself.
Loan scheme about more than just money
Business Secretary Vince Cable announced the first distribution of funds at the MADE entrepreneurial festival in Sheffield. Cable said that the scheme was not just about providing money to would-be entrepreneurs:
“They will also get access to professional mentors who will pass on their knowledge and expertise about running successful enterprises. Money is going out of the door now, so those who want to take advantage should apply today.”
You can find out more about the Scheme here.