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The Start-Up Loans are a government funded scheme to provide loans and mentors for entrepreneurs. The aim of this measure is to promote the relief of disabled and disadvantaged communities and their integration into society through the exploration and establishment of micro business. To provide such resources, support and assistance is required to participate actively in business and other means of commercial enterprise. Through the provision of access to finance programmes a micro business loan fund is made available for targeted communities who would otherwise be unable or have difficulty accessing business finance.
Start-Up Loans consist of an unsecured loan between £500 - £5,000 (€568 - €28,400), averaging £6,100 (€6,900) for a maximum five years with a low fixed interest rate of 6%. It has three stages. The first ‘pre-application support’ stage is intended to help individuals to develop a business plan. The second one is a personal loan to start-up/develop the business. The third stage involves a mentoring support in order to make sure the businesses succeed in developing and growing. The Start-Up Loans Company was set up to deliver the programme.
The British Business Bank commissioned SQW to undertake a longitudinal evaluation of the programme in 2014. They published their first report in 2016. This initial assessment of the programme reports that it had a positive effect on business start up rates, on expected sales change of the businesses involved and a higher level of confidence in running and managing businesses. The study estimates a benefit-cost ratio of around 3. This is, however, based only early findings and from self-reported data. On the other hand, the survey conducted for the study indicated that there is a shortfall in costs provided to deliver the programme, as the loans did not cover all of the expenses.
As of 2018, Start Up Loans have successfully supported thousands of individuals across the UK:
One of the problems noted by the evaluation report is that there is uncertainty about the core purpose of the programme, as it is not clear whether it is mainly intended to induce economic growth or to provide social benefits. This makes it hard to define the actual "success" of the programme. SQW also suggests that there should be more focus on the 'true' cost of programme delivery. This is important to be able to cover the shortfalls in cost, which need to be subsidised by the partners, resulting in more risk of delivery.