Start Up Loans racks up £16m in debts

The government’s loan scheme to help cash-poor start-up companies expand is in the red to the tune of some £16million -- which is “at risk” of being written off, it has been claimed.

In fact, almost a fifth of the £90m that Start Up Loans has dished out to would-be entrepreneurs since it launched is yet to be recovered, The Sunday Times reported.

Disclosures obtained by the newspaper add that the scheme’s administering company expects the default rate to be as much as 40% by the time the loans are wound down in 2018.

The firm, chaired by ex-Dragons’ Den judge James Caan reportedly said: “Start Up Loans makes every effort to recover funds…but clearly not every business proves successful.”

Earlier this year, the Chartered Institute for Securities & Investment warned that the low-interest, soft-loans offered by the scheme were a “risky” form of business financing.

Indeed, the scheme says from its outset that the government knew bad debt may be higher than alternative lending models, but it was also said to be keen to support start-ups.

Jun 13, 2014
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