Since 2012 Startup Loans UK have given out 45,618 loans to aspiring entrepreneurs dreaming of creating the next big thing. On average 30.2% of entrepreneurs will default on their loan repayments. In other words, roughly 14,000 aspiring entrepreneurs are now in debt.
Founded in 2012 by Lord Young, and backed by David Cameron’s Conservative government, Startup Loans U.K. provide small business loans to business owners up to £25,000.
According to Startup Loans, seven out of ten recipients of the Startup Loan wouldn’t have received a loan from elsewhere. Meaning simply that banks don’t feel comfortable giving loans to these aspiring entrepreneurs, but the government does.
Co-founder, Alan Donegan said “The government shouldn’t be giving loans to people to start-up businesses, especially to people on the New Enterprise Allowance Scheme who are starting out from scratch. They should not be putting people into debt at the most vulnerable point in their business, especially with a 30% default rate and a far higher failure rate!”
Co-founder, Simon Paine said: “Start-up loans kill more businesses ideas than they start. They are unnecessary, they increase the risks and stop thousands of people from getting started. They are like a cancer to the entrepreneurial spirit in the UK.”
Entrepreneur Jourdan Lamomtagne, who took a start-up loan in 2012, said: “I took a loan to fund my business as I couldn’t get investment. However, because my business didn’t make any money I now have to repay my loan along with my university debt, which isn’t ideal.”
Fellow entrepreneur Carly Ward said: “I took a Start Up Loan of £20k to help me with my business. It really helped with cashflow at the time but has caused longer term cashflow issues. I think it’s a good scheme for people starting up but many people may not think of the cashflow issues it could cause later down the line.”