Prime minister David Cameron started the new year by announcing a £30 million boost to the government's Start-Up Loan initiative to help young, budding entrepreneurs launch businesses.
The extra cash takes the total pot for start-up loans to £110 million over the next three years. The upper age limit for applicants has also been extended from 24 to 30, making more people eligible to apply.
What's a start-up loan?
Start-up loans are low-interest loans of £2,500, repayable over three to five years, to help young people aged between 18 and 30 get their business ideas off the ground. Successful applicants also receive support from a business mentor to put together a professional business plan.
The coalition government launched the start-up loan scheme in summer 2012 and created the Start-Up Loan Company, chaired by Dragon's Den's James Caan, to award financial support and manage the initiative. With more than one million 16 to 24-year-olds in the UK currently unemployed, it's hoped that the scheme will not only improve opportunities for young people, but also create companies that will begin hiring in the near future.
At an event in January, Cameron said: "Start-up loans are an absolutely central part of my mission to back aspiration, and all those young people who want to work hard and get on in life, so this country competes and thrives in the global race.
"Jobs don't come from the government; jobs come from the private sector... As we all know there have to be public spending reductions to deal with our deficit, and as the state gets smaller we need the private sector to get bigger... It is by backing our entrepreneurs and championing small business that we can drive forward and grow the economy."
How can the money help?
The main challenge faced by young people who want to set up a business is finding that first bit of funding. A loan of £2,500 may sound like a relatively small, but it can provide essential liquidity to get things moving.
Michael Evans, 22, and Jason Brown, 21, were awarded start-up loans of £2,500 each last autumn to help them develop their business, Wireside Productions. Both graduated from university in summer 2012, but found there was a lack of interesting and challenging jobs in the media industry where they'd be able to make their mark.
They started laying the foundations for the business while interning in Los Angeles last summer, where they made valuable contacts and produced a music video for an underground hip-hop artist, which has since had more than 22 million hits on YouTube. "Our success in LA was the decisive factor in pushing us to make the business work," says Michael. "Here in the UK there's a big gap in the market and a gulf in quality - we're trying to push into the top-end, corporate market," he says.
When they returned home, the two friends began thinking about how they could also become business partners. "We'd never done business before, so we weren't really aware of how to go about it," Michael says. After doing online research and seeking help from the chamber of commerce in Manchester, Michael and Jason applied for a start-up loan.
"I think a start-up loan is worth applying for, especially for people who've never experienced business before or studied it at college or university, because it can be quite scary." Michael and Jason also found having access to a mentor particularly helpful: "The business advisers are there to point you in the right direction and put you at ease - that's what really put us on our feet.
"The loan is helping us to keep the books balanced. It's enabled us to invest some money in productions that otherwise we wouldn't have been able to do, and invest in a professional website, too," explains Michael.
At the event in with the Prime minister, Caan spoke of the rising popularity of entrepreneurship among young people. He said: "There has been a major shift in the way business is viewed by the public, and entrepreneurs are now seen as creative and exciting role models." Setting up their own business appealed to Michael and Jason as it means they can challenge themselves from the beginning, rather than joining a company at the very bottom and having to wait around to work themselves to the top. "We just want to keep making things and expanding our portfolios. If you work as a runner on a big film, it's going to be years before you get noticed," says Michael.
Caan added that he's delighted about the number of young people eager to set up businesses. So far, 3,000 people have applied for a start-up loan and over 460 loans have been awarded to the business ideas with the most potential to succeed. The money made available by the government is expected to provide funding for up to 40,000 new businesses in England as the loan repayments plus interest build a revolving lending model.
Starting a business doesn't come without hard work and sacrifices. "In the beginning the money might not be as good," says Michael, "but it's an investment in your future that I think will pay off."
For more information about start-up loans, visit startuploans.co.uk