The government-backed Start Up Loans Company has reached a milestone of £250m worth of lending to small businesses, it has been announced.
Business and energy secretary Greg Clark said: “This government will build on the success of Start Up Loans to give entrepreneurs the support and opportunities they need to start a business, grow it in Britain and turn it into a global success story.”
Start Up Loans is funded by the government through the British Business Bank. Since its foundation in November 2014 the British Business Bank, which was initially set up by former business secretary Vince Cable, has supported over 48,000 small businesses through its programmes, amounting to almost £3.1bn in lending.
The company was founded by the government to act as an enabler to businesses that Clark referred to as “the backbone of our economy”. Under the scheme, new micro businesses have been able to receive a fixed rate loan of £25,000 along with free business support.
Enterprise Nation founder Emma Jones attributed the lending schemes to the UK’s record growth in startup rates, as many entrepreneurs have claimed to “not only benefit from the money, but also the mentoring that comes with it”.
One such beneficiary is training and consultancy firm Advantage Business Partnerships (ABP). Daryl Woodhouse was able to found his company on the back of lending from Start Up Loans, using the loan to fund the training of his employees. ABP now employs eight staff alongside a further 25 self-employed advisors, with a view now to extend its training programmes to business owners all across the UK.
Tim Sawyer, CEO of Start Up Loans Company, emphasised the value to the UK economy of the British Business Bank’s investment into new entrepreneurs. He said that the loans “helped create more than 45,100 jobs and for every pound invested we have returned £3 to the economy overall”.
In a Department for Business, Innovation & Skills (BIS), now the Department for Business, Energy & Industrial Strategy (BEIS), committee meeting in June, doubt was cast on the financial security of new businesses in a post-Brexit climate. James Meekings – co-founder of business financing company Funding Circle – warned that a £100m deal agreed between Funding Circle and the European Investment Bank (EIB) could be scrapped.
In an interview to the Financial Times in June, Sawyer acknowledged the uncertainty for new businesses after the Brexit vote, and pledged that the company could meet an increase in demand for government lending. The milestone will go some way to reassure potential entrepreneurs that opportunities do still exist in Britain after the referendum.
However, despite the total lending figure reaching £250m, other research has suggested that the vast majority of businesses aren’t utilising government-backed loan schemes.
If you’d like to know more about the startup loans, Business Advice interviewed three new businesses founded through lending from the Start Up Loans scheme.
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