The government is expanding its start-up loans scheme, which offers young entrepreneurs loans of about £2,500 to help them start businesses.
The scheme had originally been aimed at 18-to-24-year-olds, but is now being expanded to those aged up to 30.
To cater for the wider age band, the funding available for start-up loans will rise from £82m to £112m.
But the scheme, which was announced at the end of May, has only lent out £1.5m so far.
The Start-up Loans Company, which runs the scheme, said the relatively slow start was due to the time taken to set up local partnerships, but that the pace of loans had picked up during December.
The target is to lend all £112m by April 2015.
More than 3,000 people have applied for the loans so far, but if the target is to be met then almost 45,000 entrepreneurs will have to take out the loans.
The expansion was officially announced by Prime Minister David Cameron at an event in Preston. He said there were record numbers of new companies starting and the start-up scheme was “absolutely vital for the future of our country”.
“The government’s role has got to be to try to do everything we can to encourage more start-ups and then to help them to grow, to get finance and take people on,” he told an audience of young people and entrepreneurs.
Mr Cameron said banks should also be doing more: “A lot of this should be the job of banks, but frankly after the terrible problems of 2008-9… there are gaps in the market”.
One of those gaps was start-up finance, he said. “I am not content to sit back and wait for the banks to get on with this work.”
But Labour’s shadow business secretary Chuka Umunna criticised the way the scheme was being delivered.
“With our economy flat-lining it’s essential that initiatives like the Start-up Loans scheme are delivered effectively if they are to provide real opportunities for our young entrepreneurs.”
Mr Umunna said the numbers of loan given out so far was massively behind target and the government needed to tackle a lack of awareness about the scheme.
Start-up loans have generally been welcomed by business groups, although there have been suggestions that the average of £2,500 on offer may not be enough to make a difference
Start-up loans have generally been welcomed by business groups, although there have been suggestions that the average of £2,500 on offer may not be enough to make a difference.
“It is not about creating the next multinational, it is about creating a series of micro-businesses, giving you enough capital to start your own business,” said Ketan Makwana, from Rockstar Youth, one of the organisations administering the loans.
But Mr Makwana said the most important part of the scheme was the advice and mentoring that young people get along with the loan.
He told the BBC that he rejected the “cynical view” that the programme was a cheap way of getting people off the unemployment register.
“What it is doing is inspiring a generation to get Britain back into business,” he told BBC Radio 4′s Today programme.
“It is giving an opportunity to those who want to start a business and maybe increase employment opportunities for others in the future.”
Rockstar Youth is a national delivery partner for the Start Up Loans Scheme offering people aged 18-30 with funding and mentoring to start up and scale their business… apply online today and attend one of the business incubators.
Apply today: http://www.rockstaryouth.co.uk/start-up-loan/