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Start-Up Loans age restriction should be scrapped

Age caps on the Government’s Start-Up Loans scheme should be removed, says Lord Young in his latest report.

The Number 10 advisor on enterprise has published his second report, Growing Your Business, in which he says ambition is key to growing SME’s contribution to the economy.

Lord Young, a former executive chairman of Cable and Wireless, also proposes use of Britain’s business schools as anchors of growth, increasing the flow of graduates into SMEs.

A £30m “Growth Vouchers” programme will be established to help SMEs overcome behavioural barriers to increasing growth, as well as a further £30m for the Start-Up Loans project to meet high demand.

Businesses in their third year will be targeted with loans of up to £25,000 as part of the Enterprise Finance Guarantee.

£100m of new funding will also be made available to SMEs from the Business Finance Partnership, which promotes non-traditional forms of finance such as peer-to-peer lending and crowdfunding.

Lord Young also outlined a new “single market” approach to public sector procurement, which aims to make it simpler and more consistent SMEs.

Lord Young said: “Growing our smallest businesses would transform our economy – they are the vital 95%. If just half of the UK’s micro businesses took on an additional member of staff, unemployment would be reduced to almost zero. We need to raise the aspirations and confidence of these businesses and give them the tools to grow.”

The report touched upon areas in which Government could play a more useful role in driving growth, including better use of existing assets; and better marketing of Government initiatives, pointing to the success of the Enterprise Allowance Scheme (EAS) in the 1980s.

On financing, Lord Young said: I am aware of the increasing importance of micro finance providers – often described as Community Development Finance Institutions (CDFIs) – and their lending to businesses and individuals who are unable to access finance from more traditional sources, including the gap left behind by the banks.

“CDFIs have emerged as strong delivery partners for Start-Up Loans and I want to encourage more of these organisations to come forward as demand rises for the loans. Yet the value of CDFIs lies not just in assisting start-up companies, but in helping micro firms to develop their

businesses. This has been recognised by £30 million of funding from the Regional Growth Fund (RGF) which has been matched with a further £30 million by the Co-operative Bank and Unity Trust Bank to drive investment in small, micro and social enterprises.

“Even with support from the RGF, it is clear that there remains a significant space for the micro finance sector to fill if they are to prove themselves as a viable alternative to banks. This requires sufficient scale in the sector to enable these lenders to access cheaper capital to pass on to ambitious SMEs. That requires community lenders to be equally ambitious. I hope they step forward.”

James Caan, Chairman of Start-Up Loans and serial entrepreneur said: “I very much welcome the recommendations from Lord Young’s report to make Start-Up Loans available for everyone in this country. His vision to get Britain’s economy back on track through supporting SMEs and start-ups is something I passionately believe in and wholeheartedly support.

“The success of Start-Up Loans to date - an initiative that Lord Young has championed in Government - demonstrates the country’s need for such ambitious thinking.”

StartUp Britain co-founder Emma Jones said: “It’s clear we’ve reached a tipping point where starting a business has become an accepted career path. It’s what we’ve been working towards since this campaign started two years ago.

“What needs to happen now is an infrastructure change that will make growth and long-term development easier and more achievable for start-ups and micro businesses.

“Ideas like growth vouchers, growth loans, the Business Bank and removing some of the red tape surrounding Government and local authority procurement from SME should start to make a positive impact on British economy, helping to create the big businesses of tomorrow.”

The full report can be viewed here.

This was posted in Bdaily's Members' News section by Tom Keighley .