Government-Backed Loans Ignite Entrepreneurship Amid Unemployment Crisis
A recent report reveals that a UK Government-backed business bank has disbursed approximately £60 million to individuals who have faced unemployment or have been out of work over the past decade. This initiative primarily targets those who have lost their jobs, retirees, and students, providing them with essential financial support to embark on entrepreneurial ventures.
Empowering individuals through financial support.
According to the British Business Bank (BBB), which oversees the Start Up Loans programme, this funding is aimed at helping those who find themselves outside the traditional employment framework. Since its inception in 2012, the programme has extended loans to nearly 5,000 applicants who were unemployed at the time of their application, accumulating over £44 million. An additional £16 million has been allocated to individuals considered economically inactive, which includes students, stay-at-home parents, and retirees.
“Just because someone is not in employment doesn’t mean they should miss out on the opportunity to become an entrepreneur,” said Richard Bearman, managing director of Start Up Loans.
The Start Up Loans scheme stands out for its generous approach, offering a fixed interest rate of 6% on unsecured personal loans. These funds are sourced from the Government’s Department for Business and Trade, thus inherently supported by UK taxpayers. The initiative deliberately focuses on under-represented groups who often find it challenging to secure financing through conventional banks.
A Higher Risk Appetite for Entrepreneurship
Bearman further explained that the bank operates with a higher risk appetite when lending to individuals who are currently out of work compared to traditional high street lenders. He noted that a person who is unemployed but possesses significant savings and no outstanding housing obligations might present a lending opportunity that differs from other borrowers, such as those with a history of bankruptcy.
This nuanced approach emphasizes balancing risk while ensuring that borrowers can afford their repayments, reflecting a commitment to fostering entrepreneurial spirit among those often overlooked by mainstream financial institutions.
Innovative paths to entrepreneurship.
Government Support and Future Initiatives
In anticipation of the autumn Budget, the Government revealed its “Get Britain Working” initiative, which allocates £240 million to local services aimed at assisting individuals in returning to the workforce. Concurrently, Labour has expressed intentions to implement reforms designed to galvanize the “lockdown generation”, increasing their opportunities for employment.
Bearman asserts the importance of engaging economically inactive individuals, citing their wealth of industry experience as a significant asset for business creation or growth. He highlights that this experience is particularly vital for those who are re-entering the job market after retirement or a period of illness.
“Many economically inactive individuals have a wealth of industry experience that’s valuable for starting or growing a business,” added Bearman.
The Road Ahead for Unconventional Borrowers
The Start Up Loans programme represents a beacon of hope for many who find themselves at a crossroads due to economic challenges. By recognising the potential within the economically inactive section of society, the BBB not only supports individual aspirations but also stimulates the economy through new business ventures.
As the UK navigates ongoing economic uncertainties, it is crucial to create pathways for aspiring entrepreneurs, particularly for those who have previously faced barriers to access. The government-backed efforts signify a shift in policy, directing attention and resources towards fostering a robust network of small businesses which can ultimately invigorate local communities.
Fostering innovation and growth within the economy.
In conclusion, the initiatives taken by the British Business Bank and the Government’s broader economic strategies illustrate a proactive approach to supporting entrepreneurship amid varying employment statuses. As these programmes evolve, they foster an inclusive environment for individuals seeking to transform their circumstances through business ownership, showcasing the potential of the underutilised talent in the UK.
