Start-up Loans scheme for young entrepreneurs explained

A guide to the government-backed scheme designed to provide loans and mentoring to young people starting a business

by Abigail Van-West
Aticle is from:  http://www.startups.co.uk/start-up-loans-scheme-explained.html?utm_source=Adestra&utm_medium=email&utm_content=Feature%202&utm_campaign=SU%20Newsletter%2010%2F01%2F2013%20%28SBL%29&utm_term=1053

 

Student and youth enterprise has come to the fore in recent years. Young entrepreneurs are spilling out of schools and universities in greater numbers than ever as an antidote to rising levels of unemployment, a lack of well-paid graduate jobs, and the prominence of entrepreneurship as a career option.

Desperate to encourage entrepreneurial activity and for the private sector to solve the ills of the UK economy, the government has backed a number of initiatives, including the Start-up Loans scheme, in the hope of seeing more people start a business.

What is the Start-up Loans scheme?

Administered by the Start-up Loans Company, which is chaired by former star of BBC Dragons’ Den James Caan, the Start-up Loans scheme is a government-backed initiative aimed at providing business loans and mentoring support to create and nurture more young entrepreneurs.

Announced in May 2012 and launched in pilot in September 2012, the scheme offers average loans of £2,500 to young people who wish to start a business, once their idea is approved by one of the scheme’s many delivery partners – these are companies that have partnered with the scheme; they are responsible for distributing the loan and providing mentoring support.

The amount pledged to the scheme over the course of three years was originally set at £82.5m, but this was given a £30m boost in January 2013 with prime minister David Cameron pledging his support and pointing to meetings with recipients, some of whom have become employers months after successfully securing loans.

The £112.5m total is set to be spread across three financial years thus:

• Year 1, 2012-13: £10m (pilot scheme)

• Year 2, 2013-14: £42.5m

• Year 3, 2014-15: £60m

These loans are available in England only. The funds will be distributed across the following regions:

• East Midlands 5%
• East of England 3%
• Greater London 34%
• North East England 3%
• North West 9%
• South East 19%
• South West 7%
• West Midlands 14%
• Yorkshire and Humber 6%

Who has the scheme helped so far?

By the turn of the year 2013, more than 3,000 people had registered interest for a Start-Up Loan and over 460 new businesses had been approved for loans totalling over £1.5m. Commentators argued the initial take-up had been disappointingly slow and the reason behind the expansion of the upper age limit to 30.

Case Studies

• Wireside Productions: Film production graduates Michael Evans and Jason Brown were granted a Start-up Loan to fund the launch of their film and photography company. They are using the money to develop a user-friendly stylish website and to fund marketing plans.

• Miporto: Founded by 18-year-old Josh Valman, Miporto enables individuals without formal design skills to develop products with the help of a product manager. With the money and mentoring support from the Start-up Loans scheme, Valman has developed his business website and is set for launch in January 2013.

• Monroes Hair: Lisa Brady received a Start-up Loan to fund the launch of her hair dressing business focused on customers with hair loss problems. With the money and mentoring support, Brady has been able to expand the reach of her company and is in talks with private hospital Little Princess Trust, a charity for children undergoing chemotherapy.

How much can be borrowed?

The actual amount loaned is determined by the applicant and the delivery partner, according to how much is deemed necessary. Each loan will amount to an average of £2,500, but there is no official limit.

What are the repayment terms?

Loans must be repaid within five years at an interest rate set at the fixed rate of interest (known as the Retail Price Index and currently set at 6%) plus 3%.

The delivery partners then repay loans and interest back to a central fund, which can be used to fund further loans.

Who can apply for a Start-up Loan?

The loans were originally aimed at budding entrepreneurs aged between 18 and 24, however the upper age limit was increased to 30 in January 2013.

Consequently, to apply for a loan individuals must be at least 18 on the date of application and no older than 30.

In addition, applicants must also be living in England and are required to have an idea for a new business.

As a general rule, start-ups must be in their initial phase, without existing debt and developed infrastructure, but this is flexible and the Start-up Loans company takes a positive view to issuing loans to existing start-ups.

A business loan is not necessarily required to apply for the loan, as it is a personal loan. This means that if multiple founders apply for a loan, they could each receive a loan to invest in the same business. However, if the specific delivery partner deems it necessary for the applicant to have a business loan, they will support applicants to set one up.

How to apply for Start-up Loans

To begin, applicants simply fill in their contact details in the online application and identify the sector in which their business will be focused. This can be located on the Start-Up Loans site or through the Facebook page.

Who decides whether an applicant is suitable?

Once the application has been sent, the Start-up Loans Company then identifies a delivery partner for the applicant.

The chosen delivery partner then helps each applicant to identify what stage the business is at and then supports the applicant to develop a business plan, which will be pitched to a panel.

Those who pitch successfully will be provided with a loan, distributed by the delivery partner.

Delivery Partners:

The number of delivery partners continues to grow and the Start-up Loans Company is expecting to reach 40 by the end of its first financial year.

• The Prince’s Trust
• Business Finance Solutions, Manchester
• South West Investment Group (SWIG)
• Young Britain
• Let’s Do Business
• North London Community Finance (NLCF)
• PNE/Virgin
• Rockstar Youth
• Foundation East
• Enterprise Loans East Midlands
• Hull Business Development Fund
• GLE/One London/NACUE
• Sheffield City Council
• Norfolk and Waveney Enterprise Services
• Wessex Enterprise
• Community Finance Development Association
• School for Start Ups

What support is available?

As well as pitch training, delivery partners provide applicants with business support and mentoring to help them get their business started.

Applicants will also be eligible for benefits packages supplied by the Start-up Loans Company’s global partners, which include workspace provider Regus, accounting software provider Intuit and secure payments service Paypal.

Regus package:

• Six months of free access to Regus’ virtual office package and access to a range of Regus’ worldwide business lounges.
• Free copy of business guide, titled Start-Up Loans Kit.
• £500 worth of offers on products including business cards, netbooks and work suits.

Intuit package:

• Two years of free access to cloud-based accounting software, QuickBooks Online Simple Start.

PayPal package:

• Discounted rate with PayPal business account of 1.4%+20p per transaction (down from 3.4%) for six months.

What other loans are available for young entrepreneurs?

• The Prince’s Trust:The Enterprise Programme launched in 2009-10 offers entrepreneurs aged between 18 and 30 the opportunity to apply for three-year loans of up to £4,000, in addition to mentoring support.
• UnLtd: The social entrepreneur network offers grants of up to £5,000 to individuals aged 16 and over to fund their social enterprises.
• Business Accelerators: Accelerator programmes, including Springboard, Seedcamp and Oxygen provide start-ups with intensive training and support, followed by the opportunity to receive investment. Similarly a number of universities, including the University of Reading provide programmes that offer coaching and mentoring to budding young entrepreneurs.

Do you have the traits to go it ALONE as an Entrepreneur?

I was checking out Start-Up when I saw this article...wanted to share it any one who is thinking of starting their own business.

This article is from:
http://www.startups.co.uk/the-personality-you-need.html?utm_source=Adestra&utm_medium=email&utm_content=feature%201&utm_campaign=SU%20Newsletter%2010%2F01%2F2013%20%28SBL%29&utm_term=1053

The entrepreneurial personality – do you have what it takes? We look at the traits needed to go it alone

The differing attitudes of entrepreneurs aren’t recorded – but perhaps they should be. Regardless of your age, background, gender or ethnicity, your success as an entrepreneur is most likely to be down to your attitude to business.

If you’re determined, prepared to make personal sacrifices, have the ability to plan ahead and take on board advice while remaining focused on your goal and also, of course, have a decent business idea, you will have every chance of success wherever you’re from and whatever age you are.

To help you determine whether you have what it takes, in the sections below we describe the core skills you need to possess, or develop, to make your business a success.

Confidence

It probably won’t come as any surprise to see this at the top of the list. To succeed as an entrepreneur you do need to be a confident person. In fact, even to think you have a chance of making a new business work in the first place, you need to be a confident person! And the harsh truth is that it is hard enough to start a business from scratch that it does take an unusually confident person to get there. David Lester, founder of a number of successful businesses, including Startups.co.uk, says “Entrepreneurs need to be both very self-confident and naive; self-confident enough to believe that their idea really is better than what is already on offer, and naive enough not to know about the problems they will encounter along the way.”

Commitment

Can you work incredibly hard, all day, every day? It isn’t about putting in a couple of late nights, or making an extra effort for a one-off project. In launching your first business, you could find yourself on the wrong end of a potentially gruelling timetable that could go on for weeks and weeks, if not months. Or, in the case of Dylan Wilk, a whole year. When Dylan was setting up Gameplay.com during the 1990s, he claims he was permanently “doing 24/7 . . . I was working every single second of every single minute. Sure I had to give up a few things, like sleeping and eating, but I was willing to do that.”

Are you prepared to make the same commitment?

Motivation

Linked to your level of commitment is your ability to be motivated and, crucially, self-motivated. Being self-motivated is not the same as being pushed by someone else to do something. This motivation has to come from within. It has to come from your energy, your discipline, your focus. This is difficult enough when things are going well, but what about when things are going badly?

“It’s really tough,” admits Dylan, who recalls just a few things that went wrong in the early days. “We were burgled around eight times; we had tens of thousands of pounds in stock stolen; we had someone register our name and then try to slap a writ on us – that was pretty hairy; we had moments where it looked like the business was going to go under. And, at times, I didn’t really know what to do.” So even the most determined of entrepreneurs have moments when they are not sure which direction to take. Even if they do know, some have simply had enough and can no longer be bothered to take it. Dylan adds: “You have to really believe in yourself and decide that, no matter what, you will not be beaten.”

Emotional resilience

Belief in yourself is not enough, however. You must also have a capacity to work for yourself, often by yourself. At first this might sound like bliss, with no more workplace politics and gossip. But what about the banter, the social life and, more seriously, the brainstorming of solutions and the bouncing around of ideas? If you are like most solo entrepreneurs, you will miss this. “The simple fact is that it can be very lonely,” says Andrew Ferguson, founder of the Breakthrough Network, which counsels people on new ways to work. “You can feel, professionally at least, very isolated at times.”

Gwen Rhys, founder and director of networking organisation Networking Culture, agrees. “But there is a solution,” she says. “You need to build up a virtual team. You need to develop a circle of colleagues that you communicate with in much the same way you did in the office, except now it may be over the phone, via email, or face-to-face, but once a month rather than every day. You also need to make sure that you do get out there and mix with people. It is worth joining a professional group you connect with, even if it is only to learn that there are others who have been through what you are going through and identify with how you are feeling. This in itself can be a great source of support.”

Optimism and opportunism

All this talk about what can go wrong may sound daunting, and the last thing you will probably expect to be feeling is optimistic. However, Dylan says that this is exactly what you have to be. “There is no point doing something if you think it will not work,” he says. “But sometimes you just have to think of ways of making it work better.”

Andrew is equally encouraging. “It’s an opportunity to do something you’ve always wanted to do but never quite found anyone to pay you to do it. It’s your big chance to do something that makes you happy.”

Of course, people with all these attributes still aren’t guaranteed success. But, if you think these traits are applicable to you and this article has made you even more determined to launch your own company, it sounds as though you have decided to join the ranks of entrepreneurialism, and there’s no better time to start planning your next move than the present.