School leavers who opted not to go to university would be eligible for a student loan to start a business instead if plans promoted by Sir Richard Branson, the Virgin Group founder, and other entrepreneurs are adopted by the government.
Sir Richard told a conference in Liverpool on Tuesday that it would be “a great way of kick-starting thousands of new businesses.
“Businesses don’t need much money to get going and a student loan is enough money to get those that can grow into multinational businesses to get going,” he said
The Virgin magnate was launching the Global Entrepreneurship Congress in Liverpool, which aims to be the “largest gathering of enterprise champions” in the world.
Sir Richard said: “There are lots of budding entrepreneurs who will be starting the businesses of the future and it is great to be coming to the congress today, where we’ll be sharing lots of ideas and seeing how we can create lots of jobs and lots of great companies in the future.”
The Youth Investment Fund, devised by Sir Richard’s Virgin Media Pioneers charity, would be backed up by mentoring from experienced entrepreneurs and other support from business groups and charities, such as the Prince’s Trust and the Institute of Directors. Peter Jones, the Dragon’s Den panellist, and Paul Lindley, of Ella’s Kitchen baby food, are among those backing the plan, along with several MPs.
The government would provide upfront finance, offering the same low-interest rates and long payback terms that British undergraduates enjoy under the student loan system.
Candidates who had a viable business plan could receive loans of £3,000-£5,000. As with student loans, they would not have to start repaying the money until they had started earning above a minimum income threshold.
Michael Hayman, co-founder of Start-Up Britain, a collection of entrepreneurs that have been lobbying for enterprise friendly culture, said the government needed to back up its talk of encouraging start-ups with investment.
“They need some skin in the game,” he said. “There is a lot of rhetoric. Action is what a lot of entrepreneurs want to see.”
Mr Hayman hoped the proposal promoted by Lord Young, the former trade secretary, would appear in the Budget on March 21. One official said the government backed the idea “in principle,” and it could feature in the Budget.
The scheme would need to be underwritten by the government, Sir Richard said, because the Student Loan Company could not underwrite risk for business loans. However, he said other entrepreneurs or banks could match funds to spread the burden.
A Virgin Media Pioneer spokesman said: “This money isn’t going to enable them to build a factory. What it does allow them is to market their business properly.”
Sir Richard also said his Virgin Money banking group would soon begin serving small businesses. He said the Virgin One account, which allowed customers to borrow against their house, would return.
“Within a very few months the Virgin One account will be back on the market again and we will be getting into lending to small businesses.”
Around 3,500 people are expected to attend the week-long congress, which is hosted by Liverpool Vision, the city’s economic development company, and the Kauffman Foundation, the world’s largest foundation dedicated to entrepreneurship.
“A vibrant entrepreneurial sector is the backbone of any healthy economy,” Sir Richard said. “We must do all we can to help the companies of the future take off – as this will provide both jobs and export opportunities for the UK. Being an entrepreneur can sometimes be challenging but the rewards and sense of achievement are something that many young people should aim for.
“They have the drive and determination. It is the role of business and successful entrepreneurs to provide essential support and mentorship to help these young people realise their ambition and potential. They are the future job creators and should be given every opportunity to succeed.”
Other business leaders at the Congress include former Tesco boss Sir Terry Leahy, Lastminute.com founder Martha Lane Fox and former deputy prime minister Lord Heseltine, founder of the Haymarket publishing group.
The event takes place at Liverpool’s BT Convention Centre.
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