The Government has today launched a £82.5 million loans programme for 18 to 24 year olds who want to set up their own business.

StartUp Loans will offer financial backing of around £2,500 and advice for young entrepreneurs in a bid to beat youth unemployment and to inject new lifeblood into the economy.

Borrowers will be charged an interest rate set at the retail prices index (RPI) plus three per cent, over a maximum of five years.

The pilot project has a pot of £10 million this financial year and if it takes off, a further £32.5 million will be added next year, with an additional £40 million in 2014-15.

The launch comes on the day that a new enterprise report claims Britain would have 900,000 more businesses if it matched the entrepreneurship rate of the US.

Report author Lord Young of Graffham, who is also the originator of the new loans scheme, said: “The StartUp Loan programme is designed to help you create a business plan, and then give you a loan to get started.

“You will get continuing support from your mentor, and your future will be in your own hands.”

Former Dragons’ Den star James Caan is to chair a new body that oversees the scheme.

He said: “To be an entrepreneur is more than having a job. It gives you the freedom to make your own mark, in the way in which you choose, and create your own path to success.

“The StartUp Loans initiative provides guidance, access to expertise, and finance. These are the three vital ingredients for starting your own business.”

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