Enterprise loan scheme could create thousands of young entrepreneurs

Business leaders have long campaigned for better support for young entrepreneurs. The Institute of Directors and Virgin Group founder Sir Richard Branson are among those who argue that an education system that financially supports students studying business at university, but not those wishing to undertake business ventures, is fundamentally flawed.

So the government’s announce-ment that it will pilot a £10m youth enterprise loan initiative could prove to be pivotal.

The Youth Investment Fund scheme, unveiled in the Chancellor’s Budget announcement last month, will create a fund through which start-up companies benefit from small-scale loans and support on similar terms to student loans.

Liam Preston, chair of the British Youth Council, believes the opportunity for young people who are not interested in pursuing an academic path into work is important. “There is sometimes a difficulty in seeing how you can turn dreams into a reality,” he says. “By giving young people who have an idea the chance to develop it with financial help and a mentor through that process is excellent.”

Mentoring support
Preston is encouraged that the scheme will not only involve financial backing, but will offer young people a mentor to support and encourage them through the process of starting up a company.

“In the same way as a teacher in college or university, young people need someone to deliver key advice and enable them to turn this idea into a reality to get the most out of the money,” he says.

But he warns that there must also be a safety net for those ventures that do not succeed. “What isn’t clear at the moment is what those young people will do whose businesses do not succeed and who are unable to pay back those loans,” Preston says.

The Prince’s Trust runs an enterprise programme for young people in the UK who are unemployed or working less than 16 hours a week. It offers mentoring support, financial support and help to secure employment, education or training.

Laura Wyatt-Smith, head of the programme at the youth charity, says: “We know first-hand the benefits of helping young people to transform their lives through enterprise and self-employment. So many young people are buzzing with ideas to set up their own business, but lack the self-confidence, knowledge or financial means to get their plans off the ground.”

She adds: “With the right support, young people can not only turn their own lives around through self-employment, but also change the lives of those around them – creating new jobs and boosting their local economy.”

Naomi Spencer from Birmingham launched the company Candy Bubbles, selling luxury soap and balloon bouquets more than two years ago at the age of 23. As a single parent living in a deprived estate in Birmingham and with few qualifications, she felt unemployment was the only future she had. But after planning her son’s christening, she undertook The Prince’s Trust enterprise programme to help her gain the business skills required to launch her business.

“The Prince’s Trust has given me a future,” she says. “Without them, my business wouldn’t be here. They’ve also given me the opportunity to inspire others to do the same through my role as a young ambassador.”

Paul McEldon, chief executive of the North East Business and Innovation Centre, believes the wrap-around support that programmes like the Prince’s Trust offer must be the basis for the government’s start-up loans pilot.

“Finances are just one thing young people need to think about when starting their own business. It is just as important to ensure that they have access to support and guidance if they are to have every chance of success,” he says. “The Youth Investment Fund offers a real alternative for young people who want to go down the enterprise route.”