The number of people starting their own businesses is at
record levels. 30 years ago there were less than 2 million people who were
self-employed. This year the Government have estimated an additional 420,000 people
becoming self-employed with a forecast for 2014 being 500,000. The total number
of self-employed businesses is now close to 5 million. This represents a major
structural change in the employment market, with a high number of 18 – 30 year
olds now becoming self employed as a career choice.
The Government and organisations such as the Prince’s Trust
are providing both financial and mentoring support to new businesses. Popular
culture is now promoting businesses with television programmes such as the
Apprentice and Dragons Den. Business entrepreneurs are now celebrities! Apart
from Richard Branson, two decades ago business was a dirty word, especially for
the young.
The Government are promoting two schemes. The most high
profile is the Start-up loan scheme and is being promoted by the ex-Dragon,
James Cann. It provides loans to individuals aged between 18 and 30 of up to £10,000
at a very competitive interest rate. The scheme is run via the regional
enterprise agencies and they provide a range of business and mentoring support.
In June of this year it was announced that the age criteria was to be increased,
but this still seems to be fairly confused with some support being given to
those over 30. The other Government scheme is the National Enterprise Allowance
(NEA). This is also run by the regional enterprise agencies and provides a low interest rate loan of up to £2,500 and a weekly allowance for people who are on
job seekers allowance or other benefits. They are provided with a business
mentor and have 8 weeks to prepare a business plan and cash flow forecast.
The Prince’s Trust scheme provides low interest rate loans up to £4,000.
Again a business plan and cash flow is required, and training and longer term mentoring
is provided. This is aimed at the younger entrepreneur with an age criteria of
18-30 and those who are unemployed. Like the NEA scheme mentoring is provided by
volunteer mentors. These are experienced business people who can help with the
details in setting up your business, marketing, and taxation issues.
The above schemes provide loans and not grants. Even though
the loans are at low interest rates they have to be repaid and still are
personal debt that can impact on the individual’s future credit status . The
two Government schemes the APR is just over 6%, which is lower than bank
finance, and can be provided even if the individual has a bad credit history.
It may be worth the potential entrepreneur looking for grant funding for their
business idea. There are usually regional organisations providing grants
especially if the business idea will generate employment. As these are grants
they do not need to be repaid.
If you would like advice on starting your own business contact
info@wordsfinance.co.uk
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