The Start Up Loans Company has now issued 50, 000loans to UK startups, a milestone that takes the total value of loans the government-backed scheme has provided to early-stage businesses to 345m.
Launched in 2012, the Start Up Loans Company offers loans of up to 25, 000 to small companies at a fixed interest rate of six per cent per annum, and provides free mentoring and support to startups that have been trading for less than two years.
Having merged with the British Business Bank (BBB) in early 2017, the Start Up Loans Company now form’s part of the BBB’s UK-wide entrepreneurship drive.
Through the Start Up Loans Company, the BBB, a state-owned development bank, aims to increase the rate of business creation and improve survival prospects for early-stage businesses.
According to government statistics, the Start Up Loans Company has contributed to the creation of more than 60, 000 since its launch, as 46 per cent of loan recipients previously fell into the category of not in employment, education or training (NEET), and 42 per cent were formerly unemployed.
The Start Up Loans Company’s interim CEO, Joanna Hill, said in a statement that hitting the 50, 000 loan-mark was a proud moment. She added: Were committed to supporting those people who have a brilliant idea they want to bring to fruition, but need the funding and expertise in order to do so.
Despite the progress of the Start Up Loans Company to date, in July this year, Business Advice uncovered new evidence that suggested the scheme left a third of the entrepreneurs it supports with loans in unmanageable debt.
Figures, obtained through a Freedom of Information request, revealed that on average, since the launch of the Start Up Loans Company, 30.2 per cent of entrepreneurs who borrowed money ended up in default.
RishI Chowdhury, a startup co-founder who applied successfully for a Start Up Loan scheme as a way to finance his business, told Business Advice that very little, if any, checks were done? during his application process.
Chowdhury went on to say: Having looked at many business plans which were funded [by the Start Up Loans Company], many were nowhere near ready to be given some of the amounts they were looking for, and are probably still stuck to this day paying off those loans.
Despite these criticisms, Margot James, the UK’s small business minister, praised the Start Up Loans Company for reaching the 50, 000-loan milestone. In a statement, she called the scheme a great example of how we are supporting the UK’s vibrant startup culture, by removing barriers to finance.
‘small businesses are the beating heart of the British economy, I want to congratulate [the Start Up Loans Company] on supporting 50, 000 promising businesses, helping Britain remain the best place in the world to start and grow a business, James added.
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