Start-ups are a very hot topic at the moment. The government, along with business and various campaigning groups are very keen on encouraging people to start new businesses. This is seen as a way to stimulate growth out of the current recession and create jobs. Lots of announcements have been made and schemes launched in the last 6 months. Some of these are now reaching the point where they are actually going live.
One of the government’s more publicised initiatives is the small start-up loans available to 18 to 24 year olds announced back in May. Up until this week no-one was sure when these loans would actually be available, however reports from a marketing meeting held by Startup Britain on Monday suggest that the loans will be available at some point in September. There is no official confirmation of this as yet. You can register your interest in applying for a start-up loan on the government’s Business in You website.
One of the criticisms that has been levelled at the start-up loans initiative is that it only targets young people. There are already established schemes for young people run through The Princes Trust, Shell Livewire and VM Pioneers among others. However there are very few similar sources of funding or support available to people over the age of 30 who would like to start a business.
This week the government has announced a new scheme called Ready for Business which may address this issue. It is being funded through the government’s Regional Growth Funds with a contribution from Barclays Bank. The scheme will be run by the newly formed Cavendish Consortium which is made up of the National Enterprise Network, six regional ‘enterprise support organisations’ and Barclays. There are no age limits on this scheme and it is targeted at public sector workers who are undergoing a ‘transition from employment’. So the idea is that people who are being made redundant from the public sector should start a business instead of trying to find a new job. This funding is being targeted particularly at ‘areas disproportionally affected by the downturn in the economy’.
The Ready for Business scheme largely provides training and support to come up with a business plan and to learn how to run a business. There is no specific funding attached to it but the scheme promises support and guidance in applying for funding from other people. It is claimed that this scheme will create 6,000 new businesses and 10,000 new jobs.
Getting funding is the single biggest challenge for most start-ups at the moment, with the banks reluctant to lend. The government hopes to solve this with their new Funding for Lending scheme where they essentially give the banks money on the condition that the banks then lend it to small businesses and homeowners. Meanwhile the Seed Enterprise Investment Scheme came live in April this year. This scheme gives investors tax relief on investments in new start-up companies. The government has also pledged to give £100 million to alternative lending schemes such as invoice factoring and crowd funding to further bypass the banks.
It will take time to see what effects these schemes have on the number of start-ups that can get funding and the number of start-ups that survive. The real measure will be if they can, as the government hopes, get Britain out of the current recession and make a dint in the unemployment figures, especially for young people where the rate is currently over 20%.