The prime minister recently announced the extension of the government's start-up loan scheme to give more young people access to student-style loans in order to encourage them to start a business but is this enough to stimulate entrepreneurship?
Although the scheme was originally announced in May 2012 it was back in the spotlight as the government decided to extend the age of people eligible for the programme to 30, complementing this with an increase in the total funding available, from £82m to £112m.
While the news that the scheme has been boosted by £30m is obviously a positive move given the recent cut backs announced by the Government, the scheme undeniably has its shortfalls.
On the surface £112m sounds very impressive but on average each applicant, if eligible, would receive £2,500 which simply isn't enough to start a business if it requires premises, equipment or money to invest in a product.
Of course, businesses in this day and age need to learn to be economical and a home-based online business could benefit from the scheme but I question whether this is really the best path to take to create a more entrepreneurial Britain.
The scheme has already been criticised for a rather sluggish start with only 3,000 people having applied for the loans since May. To achieve maximum effectiveness the loans need to be linked with additional 'start-up' benefits to encourage growth and initial cash flow such as rate reductions and changes in corporation tax levels for start-ups.
Part of the criteria to qualify for the loan should be the completion of Government funded online training to help prepare the recipients for business life and to give their business ideas every chance of success. At the moment when you qualify for the scheme you do get a mentor, but it is unclear how often you will meet with this mentor and the level of support they will offer.
The age restriction should also be lifted if the scheme is to be a success. Personally I can't see why the Government would put an age limit on the scheme. There are currently a huge number of unemployed experienced, skilled entrepreneurs who are looking for work. The Government should make it a priority to target these people and encourage them to start their own businesses which in turn would have a positive effect on unemployment.
More needs to be done by the Government to make entrepreneurs aware that such schemes exist. It's essential that the Government actively promotes the scheme to a wide market, including colleges and universities, making the application process clear and concise. Banks also need to get behind the scheme and do a great deal more for entrepreneurs.
With Cameron's former business advisor Lord Young commenting that there would be 900,000 more businesses in Britain if we had the same culture of entrepreneurship as the US, more needs be done to encourage schemes such as the start-up loans with 2013 is to be the year of the SME.
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