Launched as part of the government’s measures to combat youth joblessness and to promote inclusion in the workplace for young people, the so-called Youth Investment Fund will work in a similar way to student loans but is targeted at entrepreneurs aged between 18 and 24 who want to get a head-start in business.
“Young people get a loan to go to university or college. We now want to help them get a loan to start their own business,” explained Chancellor George Osborne.
The introduction of the scheme, which will be governed by the Department for Business, Innovation and Skills (BIS), follows campaigning from high-profile business owners including Sir Richard Branson.
According to a report published in the Daily Telegraph, up to 7,000 young people will have access to the enterprise loans but each applicant will have to present a “viable” business plan and will be expected to pitch their ideas to the private and third-sector organisations that will run the scheme on a not-for-profit basis.
Young people will be expected to start paying back the cash once their business begins earning money and, just as with student loans, they are likely to have to pay interest on the sum they borrow.
Adam Soliman, the 24 year-old founder of Charbrew Tea, pointed out that the scheme could have benefits both for young people and for the economy as a whole.
“It would be a great catalyst for increasing social mobility and giving young entrepreneurs the leg up they need to create their own businesses,” he said.
“With joblessness in 16-24 year olds hitting one million, the highest it’s been in 20 years, this is a ground-breaking opportunity to unlock the potential of our future wealth and job creators.”