Since 2012, Startup Loans UK have given out 45,618 loans to aspiring entrepreneurs dreaming of creating the next big thing *(As of February 2017).
On average 30.2 percent of entrepreneurs will default on their loan repayments.
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 of Pop Up Business , 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 percent default rate and a far higher
Co-founder, Simon Paine said: “Startup 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 U.K.”
Jourdan Lamomtagne, Entrepreneur, who took a Startup 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”
Carly Ward, Entrepreneur, who took a Startup Loan 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”
Risi Chowdhury, Founder of IncuBus took a Startup Loan: “I received a startup loan to buy a double decker bus when starting IncuBus Ventures, whilst we were raising our crowdfunding round via Seedrs. It suited our needs at the time which was a short term loan we knew we could pay back from the crowdfunding money before interest charges kicked in. We were supposed to receive mentoring but were not impressed by the level of mentors available.”
Muhammad El Dharrat, Entrepreneur, was promised a Startup Loan: “I was promised a loan but they rejected my application three times. They pretended everything was rosy and I’d get one, they just gave me the run around and I felt like I was there to tick some boxes for them.”