Funding for Business: A New Choice for School or College Leavers

Under the Youth Investment Fund Pilot for Upcoming Entrepreneurs there is an anticipated overall budget of £10 million available for a scheme to assist young people who choose not to go to university to access low interest loans for starting up a business.

It will be based on the current student loan system but instead of funding course fees and academic study the money can enable a new business idea to get off the ground where, currently, only the few with ample security or exceptionally impressive cash-flow forecasts for something almost guaranteed to succeed stand much chance at that age.

Outline details of the proposed Youth Investment Fund were announced in the 2012 Budget. It has now been confirmed that the scheme will be piloted in partnership with the National Youth Enterprise Working Group, whoever they are. Loans are expected to be worth between £5,000 and £10,000 per individual, young entrepreneurs aged 18-24 who are planning to start up a business enterprise in the UK will be eligible to apply for a loan.

This should also provide interesting opportunities for those with project development and business experience not only to assess the feasibility of proposals but also to provide guidance en route. It does rather beg the question, though, as to how that assessment would work. To get the funds to attend university the terms are pretty clear: get the grades the institution requires and away you go. No questions asked thereafter. How strong will the business proposal have to be? Too heavy feasibility requirements and few students will stand a chance, and only those who might reasonably have expected to get funding through traditional routes (or a Dragon's Den type of scheme, which, incidentally is also being proposed) would get any. A too easy-going, "Here's some cash, go see what you can do with it", approach risks huge waste of public funds.

Then there is the question of the proportion of the £10 million that actually reaches the youngsters. When information learning technology and e-learning were all the rage a decade ago there were billions floating around a nation of quangos, agencies and associations of the good, bad and, unfortunately plain ugly too, of which precious little trickled down to classrooms and training for those that needed it. My first reaction to seeing this fund was to think "Yes, I'd like to run one of the organisations assessing applications, doling out the dosh and monitoring the budding businesses." That was, frankly, because it could be a nice, well-remunerated job requiring skills that very much matched mine and they'd need quite a few of us as well, of course, as a Board or Executive of the Great and the Good who would also share in the rapidly diminishing £10 million. Assuming, as one must I suppose, that it is well run and not just a budget-rescuing scheme for failing Further Education Colleges then this could be a great opportunity for those who have good skills and a good idea to do something constructive and, if nothing else, it will provide a far better experience of the real world than their colleagues either at university or lounging around at home will receive.

The Government is currently looking for private and third sector organisations to help run the scheme nationwide during its pilot phase, which will commence before summer 2012 and last for one year. The Government is planning to have the scheme running fully and evaluated in time for the 2013 Budget. So if you're Great or Good, apply soon before the sharks do.

The scheme is yet to open to applications. Details and deadline information (if applicable) will be advised when available.