The Start Up Loans scheme: financing for young entrepreneurs

An introduction to this initiative, aimed at helping 18-24-year-olds get their business ideas going

Low economic growth and youth unemployment are currently major headaches for prime minister David Cameron, but the government has launched a scheme that aims to tackle both of these problems head-on.

The  StartUp Loans scheme, which will draw on a pot of £82 million, aims to create up to 30,000 new UK start-ups by offering young people aged between 18 and 24 the funds to get their business ventures off the ground.

Under the terms of the scheme, successful applicants will be given a grant of typically around £2,500 at a favourable rate of interest, and due to be repaid after five years. Applicants will be asked to submit a business plan and will be able to chat through their ideas with those issuing the loan.

Those taking advantage of this opportunity can expect to avoid much of the red tape typically involved in applying for a loan from a high street bank or other traditional sources.

Most people in the 18-25 age group, because of their lack of experience, would find it incredibly difficulty to secure financing at a reasonable rate of interest, if at all. Successful applicants to Start Up Loans, however, will benefit from not only a cash injection but also the tutelage of a mentor from the business world who will offer advice on getting started.

James Caan, best known for his role on the judging panel of popular BBC business show Dragon's Den, has been brought in to chair the scheme.The government is no doubt hoping that his strong public profile and passion for entrepreneurship will help it to flourish.

"To be an entrepreneur is more than having a job," he says. "It gives you the freedom to make your own mark, in the way in which you choose, and create your own path to success. It can be challenging, and exceptionally hard work, but the rewards are immeasurable."