The first pilot schemes will soon be underway after the recent UK budget announced a boost for small business with a new loan initiative. A one year pilot scheme focuses on people aged between 18 and 24 who will be able to apply to borrow between £5,000 and £10,000 (about $12K) to back their business idea. If this student-loan type scheme is successful, the government says it wants to introduce it permanently. While this has been welcomed by many in the small business community, this scale of small business funding raises a few questions.
The first issue is that the size of this funding is likely to be supporting a one-person business, rather than young entrepreneurs who are creating wealth-generating business. Retailers or manufacturers are not going to be able to get started via this loan scheme, instead it seems more intended to the soho (small office/home office) market which already proliferates. Without suitable business advice and mentoring these type industries may well spend this investment on other services rather than long term growth. But the second issue is more to do with the assumption that it is just the young that need encouragement – with no recognition that lots of new businesses are started by those over 25 (even over 55) who may well have more real business experience that can translate into business success but still need help and advice.
It is not all about the funding, welcome though that is to many start-ups, it’s the business advice and mentoring that can be provided that can be the real life blood for new business. This should be made available to as many as possible, not just reserved for helping the young, laudable though that is.