Despite a backdrop of
challenging economic conditions and a perception that fear of failure could
stifle entrepreneurial activity, a recent report by the Global
Entrepreneurial Monitor, has found there has been an increase in
early-stage entrepreneurial activity in the UK. To ensure these emerging
companies can establish themselves and grow, it's important that their founders
can secure access to the funding needed to accelerate their business.
But at
the same time, faced with challenges in accessing finance and worries about
fluctuating interest rates, many founders resort to personal networks for financial
support. Financial intermediaries have reported to the British Business Bank
that they are seeing a significant increase in reliance on friends and family
for finance, rising from 17% to 26% in the last six months. Additionally,
Charles Stanley's recent findings show that one-fifth of start-ups are funded
through inheritance, with another 19% relying on financial contributions from
parents.
That’s interesting, but what
do those without friends and family money do?
One answer may be Start Up Loans. Start Up Loans’
purpose is to finance those who might struggle to set up a business via other
means and those from underrepresented groups. It’s essential that we are able
to give everyone with a viable business idea the opportunity to access capital
and support, so they can create jobs in their local area and boost the economy.
This can help improve local areas, in some cases boost the high street and make
sure setting up a business is equitable and not dependent upon family wealth.
Start Up Loans provides an
essential financial resource for small businesses, offering unsecured loans of
up to £25,000. With a fixed interest rate of 6% per annum and flexible
repayment terms ranging from one to five years, these loans present a viable option
for start-up founders. The fixed payments facilitate easier budgeting and
financial planning, all without the requirement of putting up a home as
collateral, making it an accessible choice for entrepreneurs from various
backgrounds, including renters.
Liang
Zhang, co-founder of Robin Valley said: "As
a founder who doesn't own property in the UK, securing funding was a major
hurdle. Start Up Loans was an obvious choice as a renter, as it offers finance
without needing to put up a property as collateral. The fixed interest rate and
clear repayment plan made financial planning straightforward, allowing me to
focus on growing my business."
When considering the options
available for accessing finance, there is a whole range of tailored financial
products available to founders, from traditional debt facilities to equity
finance.
For
start-ups, the British Business Bank’s intermediaries found the most popular
form of finance is term loans, with 53% of founders of SMEs looking for this
type of finance. Term loans have a predetermined repayment schedule, typically
spread over several months or years and usually come with a fixed interest rate
and set payments. This makes them popular among small business owners as the
monthly repayments are predictable and easier to account for when undertaking
business planning and budgeting.
Term loans can broadly be
categorised into two types, secured and unsecured loans. Secured loans are a
type of credit that is backed by property or assets, such as a house. Unsecured
loans do not require an asset to be put up as collateral.
The nature of secured loans
can present obstacles for those who rent their homes, as they usually lack
property to use as collateral. In the UK, with approximately 19%, or 4.6
million, homes being privately rented this means a significant number of potential
entrepreneurs could be excluded from accessing finance that requires property
as collateral.
Given this context, it's vital
to have unsecured loan options available for start-up businesses. This
inclusivity ensures that the full potential of this boost in entrepreneurial
activity can be harnessed, regardless of whether the business owner is a renter
or a homeowner.
The rise in early-stage
entrepreneurial activity in the UK is a positive sign of a resilient and
innovative spirit amidst economic challenges. To nurture this growth, it is
imperative to provide diverse and accessible financial solutions. Start Up
Loans offers unsecured term loans that cater to a broad spectrum of
entrepreneurs. Ultimately, Start Up Loans stands ready to back solid business
ideas, regardless of the entrepreneur's background, ensuring that everyone has
the chance to turn their entrepreneurial dream into reality
