START UP LOANS - A RESULT FOR THE ACCESS TO FINANCE REVIEW
I am naturally delighted that this has finally happened, as this was one of the recommendations of stage one of my access to finance review for the Welsh Government namely that:
"The Welsh Government should examine how UK Government funds can be used more effectively to support businesses in Wales, potentially through the provision of matched funding through its own resources. In particular, as it currently does not provide any loans to those start-ups that create the vast majority of jobs in the economy, the Welsh Government needs to develop an appropriate mechanism for this type of support, based on the Start-Up Loans programme operating in England, although this should be applicable to all new businesses and not only those started by 18-30 year olds".
More importantly, the principle of low interest rates for possibly the riskiest type of business shows that the high cost of borrowing should not always be a feature of government lending programmes, as some in Wales have suggested. Certainly, other countries are able to offer lower costs of lending to SMEs through the banks and the public sector working together and there is no reason why this should not happen in Wales in the future.
There have been positive reactions from both Cardiff Bay and Westminster to the announcement.
Welcoming the new loans, Economy Minister Edwina Hart said "I am pleased to support the introduction of Start Up Loans to Wales as part of our overall comprehensive business support package for young start up companies. Encouraging entrepreneurs to start their own business is an important strand in our strategy for economic growth although we are aware that access to finance can be a real issue for young businesses. The availability of relatively low levels of funding at a fixed interest rate addresses this and has the potential to make a real difference in getting a business up and running. The loans will be delivered in Wales as part of our Business Start Up service where the providers are already working with individuals wishing to start up in business. The availability of low interest rate loans, together with business advice and mentoring, enhances the overall package we can offer entrepreneurs.”
UK Government Business Secretary Vince Cable said "Last year there were a record number of start ups in the UK, supporting our efforts to make this the best place in the world to start and grow a business. The start up loans scheme continues to thrive, with 8,000 loans worth £45 million already advanced. This welcomed extension to Wales will provide even more opportunities for budding entrepreneurs to gain access to finance and receive professional business mentoring to help them start and run a successful enterprise.
Secretary of State for Wales, Rt. Hon David Jones said "Unleashing the potential that Welsh entrepreneurs and our small businesses have is critical if we want to see the economy continue on its journey from rescue to recovery. From Village Bakery in Wrexham (Fast Growth 50 award winner) to Smart Solutions Recruitment in Newport (Fast Growth 50 award winner), small businesses owners across the length and breadth of Wales have been harnessing the drive and ambition needed to expand and to create new jobs. It is clear that there is real scope to be entrepreneurial in Wales - and to succeed The roll out of the Start-Up Loan scheme in Wales will provide many more of our budding entrepreneurs with the opportunity to join in this success. I would encourage them to seize the support available to strike out and to turn their ideas into the viable, successful businesses of the future."
Start Up Loans CEO, Tim Sawyer, said: "I am delighted to announce the partnership with our colleagues in Wales. We are very much looking forward to forming strong relationships with both partners and entrepreneurs alike. And I am equally pleased to see the scheme extend to all ages . Now we are able to help any enterprising individual with a strong business idea, and the determination to see it through.”
The loans from the UK Government backed scheme will be delivered through the Business Start Up service that operates across Wales and applications must be supported by robust business cases. The minimum loan is £1000 with the average loan around £4,500. The loans are to be paid back within five years at a fixed rate of interest currently set at 6%.
The five lead delivery providers, who will approve loan applications locally on a panel basis, are: Antur Teifi, Wrexham County Borough Council, Business in Focus, Annog Cyf and The Centre for Business.