Evaluation of Start Up Loans programme reveals benefits for entrepreneurs

An independent evaluation into the British Business Bank’s Start Up Loans programme has found small businesses accessing this funding have higher survival rates.

Research conducted by SQW working in partnership with Warwick Business School’s Professor Mark Hart, Qa Research and The Data City, found that the businesses the government-backed loan scheme supports survive longer, grow more and create jobs across the UK. The programme also supports a significantly greater proportion of smaller businesses outside London and the South East, as well as female and Ethnic Minority entrepreneurs, and reaches businesses that may not otherwise have accessed funding from the private sector.

The evaluation measured the impact of Start Up Loans drawn down by two cohorts of smaller businesses who took out loans in financial years 2018/19 and 2021/22, and key findings include:  

• Economic impact: For every £1 in economic costs of the programme, between £5.50 and £5.60 of additional Gross Value Added (GVA) is generated for the UK economy. 

• Job creation: In addition to the employment of the loan recipients themselves, one additional employee job was created for each loan, on average.  

• Business growth: Loan recipients’ businesses experienced stronger growth since incorporation than comparator businesses.

• High proportion of female founders: 41% of Start Up Loans recipients are women compared to 20% of zero employee businesses being women-led. The programme also attracted a relatively higher proportion of loan recipients from Black, Asian or Other Ethnic Minority backgrounds compared to the UK business owner population.

Since the programme started in 2012, Start Up Loans has provided more than £1.1 billion of start up financing to UK start up and early-stage businesses, across more than 118,000 separate loans. In the North West, over £142 million has been provided to early-stage businesses across almost 14,700 loans.

Richard Bearman, Co-Chief Banking Officer, British Business Bank commented:

“This evaluation is a very positive independent validation of the importance of Start Up Loans to financing and supporting UK start ups. The evaluation clearly shows the Start Up Loans programme helps support start up and early-stage businesses to survive longer, grow more and create jobs across the UK, mostly outside London and the South East. The programme also plays an important role in providing finance and support such as mentoring to those without family money to back them, or those from typically underrepresented groups.” 

Professor Mark Hart, Deputy Director, Enterprise Research Centre, Warwick Business School said:

“The Start-Up Loans programme is an important and long-standing feature of the business support landscape in the UK and this latest evaluation demonstrates that it continues to create significant value for those accessing the loans in terms of helping gain traction in their chosen markets. The late David (Lord) Young was the initial driving force behind this initiative in 2012 and these results show just how important his vision was in creating cohorts of more sustainable start-ups which are of crucial importance to the growth of the UK economy.” 

Small Business Minister Gareth Thomas said:

“That initial injection of cash is critical for any small business trying to get underway. 

“When small firms get the chance to start up and grow, it can unleash a tidal wave of opportunity, providing jobs for local communities, boosting revenues and helping grow the economy.”