A new scheme to help young entrepreneurs start businesses has been launched by the government.
The StartUp Loans scheme is aimed at people between the ages of 18 and 24 and will provide up to £82 million in loans.
The typical loan is expected to be in the region of £2.500 and launching the scheme, Prime Minister David Cameron, said that he hoped up to 30,000 new business start ups could be helped; giving a much needed boost to the economy.
The scheme will be run in conjunction with the Prince’s Trust, who already provide small loans to fledgling businesses run by young people; James Caan of the hit BBC program, Dragon’s Den will also be involved.
Alan Kennedy, Director of Operations at the Prince’s Trust said: “We know from our experience at The Prince’s Trust that supporting young people into self-employment can help turn their lives around.”
He continued: “We’re really pleased to be a part of this initiative as it will enable us to help even more disadvantaged young people through our popular Enterprise Programme.”
James Cann said: “As chairman of the StartUp Loans company my challenge is to ensure that these funds are distributed without red tape, and give young people the opportunity that I absolutely believe they need.”
The loans are unsecured and must be repaid within five years.
The interest rate will be set at 3% above the Retail Prices Index (RPI), which was 3.5% last month.
Business leaders welcomed the launch of the scheme, saying that it could prove a valuable source of finance to young entrepreneurs who banks are unlikely to lend to because of a lack of track record.
The rate of interest being charged is also competitive compared to other sources of business finance and the fact that the loans are unsecured will help many businesses at a time when most banks require security, generally against a property, before they will agree a loan.