Established in 2012, Start Up Loans is a government-backed programme that offers fixed-interest loans and post-loan support such as mentoring to entrepreneurs in the UK. Since its launch, it has delivered more than 120,000 loans totalling over £1.2billion, and now, reveals that in the five years since the first lockdown, there has been a 21 per cent surge in first loan applications.
The UK startup scene is in full swing according to Start Up Loans, with aspiring entrepreneurs taking out finance to kickstart their dream businesses. Start Up Loans is a part of the British Business Bank and has revealed that between 2020 to 2025, an extra £176million worth of loans was taken out in comparison to 2015 to 2020. There has also been an increase in the value of individual loans by roughly 19 per cent (£2,143).
Small businesses faced a lot of challenges in 2020 following the pandemic. Nevertheless, it proved to be a transformative year for UK startups according to Start Up Loans. In the financial year that ended just around the time lockdown was first introduced, 8,652 Start Up Loans supported UK start up businesses. The following year this rose to 11,322, a 31 per cent increase, and numbers have remained higher than pre-pandemic levels ever since.
Richard Bearman, co-chief banking officer, British Business Bank: “When I think about the Start Up Loans programme, the pandemic was a real pivotal moment. So often I meet business owners and their stories start with how lockdown was the chance to stop and really think about what they wanted to do and achieve.
“We saw a huge increase in the number of loans during 2020 and into the early part of 2021. Although some of that demand for finance has understandably cooled off, we still see a lot more people seeking Start Up Loans funding for a business. In that respect the shock of lockdowns could well have contributed to a change in how potential business owners thought about the opportunities of entrepreneurship.”
Business life in a pandemic
The pandemic lockdowns brought normal life to a temporary halt and offered a unique opportunity for people to rethink their futures and pursue their dreams. This prompted many to seek alternative careers, like business owner Candice Mason, who took out a Start Up Loan to follow her aspirations of running her own company.
During the pandemic, Candice experienced early menopause, leading to health challenges that caused her to reevaluate her life path. She decided to leverage her passion for home-brewing holistic teas, which helped alleviate her symptoms.
Candice Mason, founder of Mother Cuppa, said: “I had been brewing my own teas to combat my health issues for years. When the pandemic broke out, it made me stop to think about what I really wanted to do with my life. I felt a strong sense of ‘if not now, when?’. At first, it was scary, but I have been able to take my passion and turn it into a viable business, which is the most rewarding thing. I’ve faced challenges over the years, but the business is now going from strength to strength.”
Growing ethnic minority startups
The five-year period since the first lockdown has also seen a significant increase in Start Up Loans finance provided to ethnic minority startups and early-stage business owners. The volume of loans to recipients from an ethnic minority background increased by 5.39 per cent versus the five years up to the first Covid lockdown.
Roughhyl one in 10 (10.55 per cent) of those getting finance are aged between 18-25. Meanwhile, 12.22 per cent are aged 50 or over; so together these two age groups account for more than a fifth of Start Up Loans. The largest age group are those with more career experience, with 56 per cent aged 31-49 years old.
The age profile of business owners using Start Up Loans to finance their startup or early-stage business has remained consistent pre and post-Covid lockdowns.
