The government will lend young entrepreneurs money to start their own business on similar terms to student loans, under a pilot scheme to be launched later this year.
Sir Richard Branson, who has been lobbying alongside young businesspeople for a £10m youth enterprise loan scheme, welcomed the announcement in Wednesday’s budget.
“The entrepreneurs of today will be the job creators of tomorrow so I’m delighted that the government has listened to those at the very start of their careers,” said the Virgin founder. “The country is full of gifted and enterprising people so this pilot, which crucially has business mentoring and support at its heart, will help prevent a lost generation of talent.”
An online information-sharing community for 2,000 startups, organised by Virgin Media, has been arguing that loans should be available for young businesspeople on the same terms as those for university studies.
Students are able to borrow at an interest rate based on RPI inflation and have to make repayments only when their earnings exceed £21,000 a year.
Other measures to tackle youth unemployment announced on Wednesday included £20m of new money to support 19,000 degree-level apprenticeships, topping up £180m committed last year.
“Young people get a loan to go to university or college,” said the chancellor, George Osborne. “Now we want to help them get a loan to start their own business.”
Abdul Khan, founder of ratethatcurry.com and a member of the Virgin Media Pioneer startup community, described the scheme as “just the sort of financial help young entrepreneurs need in this tough economic climate”.
The business and enterprise minister Mark Prisk said: “This government thinks that everyone should have a chance to turn their idea for a business into reality. That’s why in the budget this year we announced we are setting up a youth enterprise loan scheme.”
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