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Tuesday, November 29, 2022

£884m Government Loan Scheme Expanded to Help Thousands of Scottish Entrepreneurs

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Business Secretary widens Start Up Loans scheme to businesses trading for than three years.

A loan scheme for new businesses that has provided more than £54 million pound in loans to Scottish businesses is to be greatly expanded, delivering much needed finance to Scotland’s array of innovative start-ups, the Business Secretary Jacob Rees-Mogg has announced.

The Start Up Loans programme has provided more than 95,000 loans to start-ups across the UK so far, including 6,200 for Scotland, offering an average of just over £9000 in support.

The programme’s eligibility will be expanded to support businesses trading for up to three years, up from two years.

Alongside this, a new second loan will be available to eligible businesses operating for up to five years, given them the finance to expand at a crucial juncture.

Business Secretary Jacob Rees-Mogg said: 

“Scotland is a hub of entrepreneurship, with a quarter of a million Scots entrepreneurs setting up businesses in 2020 alone.

“Expanding the Start Up Loans Scheme will put even greater funding into the hands of Scotland’s budding small businesses, building on the £54million already provided, supporting them through this challenging period and delivering jobs and prosperity across Scotland.”

Expansion of the Start Up Loans scheme follows the 2021/22 Spending Review, at which the government made the commitment to provide 33,000 loans to the programme over the next three years.

The extension builds on key measures the Government has announced for small businesses in particular, including extending the £4.5 billion Recovery Loan Scheme and the delivering the Help to Grow schemes, which provide mentoring and free software to thousands of businesses across the UK.

Start Up Loans provide a fixed interest rate of 6%, as well as mentoring, support and funding to aspiring business owners in every corner of the United Kingdom.

Its impact has been particularly noticeable among individuals who might find it difficult to secure loans from traditional lenders.

Case study: Julie Di Toro & Sam Baker, Co-Founders of Mistral from Leith 

The pair took out a £7,500 loan in August 2020, and a second loan of £7,500 in September 2020 to launch Mistral, a specialist wine shop and bar.

Having both been made redundant during the pandemic, the couple decided to make the most of the opportunity and use their experience in the hospitality industry to launch the business they’d always dreamed of.

“We’ve always known that we wanted to open up our own place, but when the pandemic hit and both of us were left unemployed, we decided that now was as good a time as any to turn our dream of owning our own bar into a reality.

“Starting a business in the pandemic meant we learnt quickly how to think on our feet.

“Our initial intention was to set up a wine bar, but due to restrictions we instead had to branch out into the retail space. This was an unknown territory for us but, thankfully, the mentoring we received from Start Up Loans helped guide us through any hurdles.

“Given our circumstance – launching in the pandemic after being made redundant – having the support of the second loan was invaluable to the success of our business and we were able to open the bar with the extra money.

“We would urge any aspiring business owners to look into the options available to them.”

Susan Nightingale, Devolved Nations Director, UK Network, said:

“We are delighted to be able to extend the reach of the Start Up Loans programme to help support businesses, including those who need extra support during a time of continued economic unrest.

“This extension of the programme will enable us to work with those businesses that had perhaps just got going when the pandemic hit, or are ready to scale up now that they are back on their feet.

“We want to ensure that these businesses do not get left behind.

“We have always been committed to providing support and funding to small businesses that hail from every corner of the country, with entrepreneurial ambitions across all industry sectors.

“Having delivered over £54m in funding to the Scotland alone highlights our continued efforts to help people from a diverse array of backgrounds achieve their business goals.”

Breakdown of loans by region

UK RegionLoans MadeAmount Lent (£)Average Loan Amount (£)
East Midlands5,35948,399,5509,031
East of England6,77564,077,9989,458
London20,232183,942,5509,092
North East5,22847,041,9109,001
North West11,842106,120,4728,961
Northern Ireland1,46912,450,1458,475
Scotland6,20454,223,3428,740
South East9,43694,710,81310,037
South West8,21774,468,7619,063
Wales4,31842,716,4109,893
West Midlands7,89772,079,8639,127
Yorkshire and The Humber8,31979,139,1169,513
Region not obtained3764,658,15612,389
Grand Total95,672884,029,0859,240
Start Up Loans figures measured up to 30 June 2022.
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