There were two significant recent pieces of news for young people in the UK interested in becoming entrepreneurs. Firstly, ONS data shows that youth unemployment has improved slightly, with the percentage of young people out of work dropping to 20.5% in the three months to August, from 21.8% the quarter before. While some of this will be accounted for by the increase in those working part time, it can only be good news that more young people are in some form of work. We also watched the Government's announcement that it is extending its New Enterprise Allowance (NEA) programme with interest. This will potentially enable another 33,000 young jobseekers to start up their own businesses.
Youth Business International's model for helping young people across the globe set up their own businesses through our network of charity partners is based on providing a combination of financial and mentoring support. It's an approach that the NEA scheme's format echoes, which is where our interest stems from, and one we've found to be highly effective. Of the businesses YBI has supported to date, 70% are still trading after three years and each entrepreneur has created on average of 3.4 jobs.
With the NEA, young people starting a business get a weekly allowance payable for six months as well as the potential to apply for an unsecured loan of up to £1,000 to put towards start-up costs. In addition, and most importantly, they get a mentor who will support them in developing and implementing a business plan. It's good to see this acknowledgement that financial support and mentoring must go hand-in-hand if a start-up is to be successful and sustainable in the long run.
This kind of model that marries mentoring and funding is one that works hard to open up entrepreneurship to people from all backgrounds. We've seen it work in countries across the world, regardless of the barriers that need to be broken down. Especially with the economic climate the way it currently is, accessing funding is something that can make or break a business before it even gets up and running. All many young people with a good idea need is what might seem a very small amount of initial investment. However, Youth Business International's global network reports that accessing even surprisingly small sums is proving to be a struggle for budding young entrepreneurs regardless of their location. The UK story is echoed the world over.
Last week, we welcomed several young entrepreneurs to London - the finalists and winners of the YBI Entrepreneur of the Year competition which we run in partnership with Barclays. In telling the story of how they came to set up their own businesses, and the challenges that they faced in doing this, each and every individual highlighted access to funding as a huge initial challenge. The other thing they all had in common was the central role that they felt mentoring had played in their success.
Take the competition winner - Naibo Yu from Hangzhou in China - as an example. At just 27 years old, Naibo runs an educational software company with a turnover of £20million per year and employs 200 people. When he was trying to get funding four years ago, however, banks, private investors and the government all turned him away as he had no income or assets. When Youth Business China provided him with a $5,000 loan for research and development it made all the difference - the innovative and fast-growing company has grown 5,000% year-on-year and now operates all across China.
Yes, the funding was vital, but Naibo believes the mentoring and guidance he received was just as important as the start-up loan. With so many potential pitfalls out there for fledgling businesses, being able to learn from and question someone who has already been there is invaluable.
We're not saying that this combination is failsafe - a certain percentage of start-ups won't succeed and that is a risk every would-be entrepreneur has to take. But we know from our own experience that schemes that offer mentorship and funding coupled together, can help open up entrepreneurship to young people from all backgrounds. With almost 1million young people in the UK still out of work, we'll be keeping an eye on the results of the NEA extension and are hopeful it's a positive step in the right direction.
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