Government Enterprise Advisor Lord Young describes Business Start Up Loans as ‘one way of getting from where we are to where this country could be’
They are available as a capital investment of up to £2500 for 18-24 year olds
Applicants are given a mentor, who according to Lord Young – will work with you to create a business plan, knock your idea into shape and help prepare you to present your idea to an awarding panel.
The project has worked successfully with the Princes Trust often with young people from less advantaged backgrounds, resulting in a better than average survival rate compared with national figures.
‘The future – before very long being employed will be the exception not the rule. People may have 2 or 3 jobs or sources of income’. Lord Young
Below are the questions which we posed to the UK Government’s Enterprise Advisor, Lord Young
Do applicants have to have a clear plan?
You are provided with a mentor, who will help prepare a business plan and pitch to a judging panel. From the experiences of the Princes Trust 1 from 4 get the loan but the remaining 3 benefit by returning to education or getting a job.
In the first phase, the project may help 33,000 young people start their own business but in total over 100,000 may benefit from the process.
How much is available and do you have to repay?
The maximum loan is £2500 which is usually enough to get started. Other people can access money from friends or family. The loan is repaid over 5 years at an APR of 3% over RPI with plans to issue at similar terms to Student Loans with repayments only starting once income reaches a threshold level.
And yes you have to pay it back even if the business is not successful. But if the business fails, the experience of running your own business will provide a great deal of employability skills and increase your chances of finding employment.
What would you say to parents who want their children to get a career?
Established businesses have changed. Over the past 25-30 years, many have become smaller units. Technology changes mean that jobs can be created and also disappear quickly. If you are able to secure a job and be happy then that’s great, but remember that a job for life no longer exists and keep in mind what you can do for yourself.
How do you find a mentor?
Currently in the early stages, announcements will be made publicising the application arrangements. Local providers will appoint mentors and arrange the funding panels.
Mentors are volunteers and there are currently around 20,000 people involved. With better communication technology the mentors can be based anywhere.
Does the support of the mentor end once the money is awarded?
No – support is ongoing for a year or two to support the business in its early stages.
Are mentors industry specific?
Yes – mentors are matched with the business
Are there plans to extend beyond the 18-24 age range?
There is an existing programme called Prime for the over 50s. We also plan to increase to the over 25s and to women wanting to return to work.
Are loans available to current students?
Yes, they are open to anyone in the age range. Students can apply if they think they have sufficient time to commit to the business. When I started my first business I worked at it in the evenings until it was bit enough to provide a full time income, then I left my job and went off on my own.
What are the 3 most important things that a person starting in business needs to know?
Cashflow, cashflow and cashflow!
You can grow broke in business by being too successful. It really is important to understand the flow of money.
Things will go well and things will go not so well – but its all part of the process.
People are not born business experts, they learn along the way. It’s an exciting journey, you work hard but the rewards are great.