Which region of the UK is the most entrepreneurial? If you said London, think again. New figures from the Start Up Loans programme reveal that it has issued more loans to would-be business owners in the North of England than anywhere else over the past eight years.
In total, the programme has delivered 18,612 loans worth £151m to aspiring business owners in the North of England (defined as the North West, Yorkshire and Humber and North East regions) since its launch in 2012. That’s significantly ahead of the 15,841 loans worth £128 million made to entrepreneurs based in London.
The data underlines how Government-backed initiatives can prove crucial in supporting business growth in areas of the country not always associated with a culture of start-up ventures. As the banks have pulled back from small business lending – overall lending from banks to small businesses has declined since 2012 – so other sources of finance have stepped into the gap.
The Start Up Loans programme is a good example. Originally set up as part of a Department of Business initiative to promote business start-ups, it now operates as part of the Government-backed British Business Bank. It offers loans of up to £25,000 to founders of new businesses, though the average amount lent to almost 70,000 businesses backed so far is around £8,100.
Importantly, the StartUp Loans Company’s loans are affordable, repayable over terms of between one and five years at an interest rate of 6% a year, and don’t require you to put up any collateral or security. The finance also comes with 12 months’ worth of free mentoring and business advice from the organisation.
To be eligible for the scheme, entrepreneurs must be at least 18 years old, have UK residency and plan to launch a business in the UK. They also have to certify they have been unable to secure business finance from any other source. The programme conducts credit checks on applicants and they must be able to show they will be able to repay the loan.
In practice, some businesses are able to secure quite sizable amounts of funding. Where multiple business partners are setting up together, they can each apply for a Start Up Loan of their own, though the maximum the programme will lend to any one business is capped at £100,000.
You can even use the programme to raise money to buy an existing business, even it’s not a start-up. Franchise businesses are also covered by the initiative.
The Start Up Loans website carries full details of the application process, including templates you can use to set out the business plan and cash flow forecast you will need to provide in order to secure a loan.
Eight years after its launch, ministers see the Start Up Loans programme as a valuable tool as they pursue the “levelling up” agenda, ensuring that the UK’s wealth is shared more broadly throughout its regions. The programme points out that more than a third of people it has lent to were previously unemployed or economically inactive – and that almost one in six loan recipients are aged between 18 and 24, a group that typically finds it much more difficult to secure business funding.