From Idea to Enterprise: How the UK Start Up Loans Scheme Creates Jobs

On a cold afternoon in Liverpool, Liang and Wanchong stood inside their small jewellery studio wondering how long they could keep going. Their brand, Robin Valley, had built a loyal following through craft fairs and independent retailers. Customers loved their sustainably made pieces and museums were showing interest, but interest did not pay suppliers. Banks refused to lend because the business was young and the founders had no assets to offer as security. Growth felt impossible, and without growth, survival itself was uncertain.

What changed their path was a government backed Start Up Loan. With a loan of £15,000 and structured mentoring support, Liang and Wanchong were able to scale production, secure wholesale contracts and hire staff from their local community. Within a short span of time, Robin Valley was supplying over sixty major institutions including the National Museums Liverpool and the National Trust for Scotland. The business went from two founders working alone to employing around twenty people, alongside offering paid placements to local college students. Liang later reflected that without the Start Up Loan, the business would likely have remained stuck at subsistence level or closed altogether.

Stories like this help explain what the UK’s Start Up Loans Scheme is designed to achieve. It is not simply about encouraging entrepreneurship as an abstract goal. It is a practical policy intervention aimed at converting ideas into viable enterprises and turning self employment into a source of wider job creation.

The Start Up Loans Scheme was launched in 2012 and is delivered through the British Business Bank. It provides government backed personal loans of up to £25,000 to individuals starting a business or trading for less than three years. What sets the scheme apart is not just access to finance, but the combination of affordable credit and structured mentoring that supports entrepreneurs through the most fragile early stages of business life.

Since its introduction, the scheme has supported more than 118,000 entrepreneurs and delivered over £1.1 billion in finance across the United Kingdom. These businesses span sectors ranging from food production and retail to creative industries, technology and personal services. Each enterprise represents not just a livelihood for the founder, but a node of economic activity within a local community.

The impact becomes clearer when we look beyond the headline figures. Independent evaluations show that businesses supported by Start Up Loans have significantly higher survival rates than comparable firms that did not receive support. Around two thirds of Start Up Loans backed businesses are still trading after five years, compared to less than half of similar start ups without government backed finance. This survival translates directly into sustained employment and stable income streams.

In St Albans, for example, the founders of Ramen Electra used a Start Up Loan to open a small noodle restaurant. Their business became the one hundred thousandth recipient under the scheme. What began as a single food outlet quickly became a stable employer, providing regular work for kitchen staff and service workers in the town. The founders have spoken about how the loan allowed them to cover initial rent and equipment costs at a moment when private finance was simply unavailable.

In Wales, a small indoor climbing centre relied on Start Up Loan funding to stabilise operations and retain staff during a difficult early period. The owner later explained that the mentoring support was as important as the money itself, helping him rethink pricing, marketing and long term planning. The business survived a period when many similar ventures closed, preserving jobs and maintaining a community space that would otherwise have disappeared.

The scheme has also played a significant role in widening access to entrepreneurship. Around forty percent of Start Up Loans have been issued to women, and roughly one fifth have gone to founders from Black, Asian and other ethnic minority backgrounds. These figures are notably higher than their representation in the wider small business population, suggesting that the programme helps reduce structural barriers to finance.

Young people have benefitted as well. More than fifteen thousand loans have been issued to entrepreneurs aged between eighteen and twenty four, supporting those who might otherwise face insecure employment or underemployment. For many, the scheme has provided a route to stability at a stage of life when economic opportunities are often limited.

Beyond individual businesses, the broader employment effect is substantial. On average, each Start Up Loans backed enterprise generates at least one additional job beyond the founder. Taken together, this has resulted in tens of thousands of jobs created across towns and cities, often outside the UK’s major financial centres. Nearly seventy percent of loans have been issued outside London and the South East, reinforcing the scheme’s role in regional economic development.

Like any large scale programme, Start Up Loans is not without challenges. Application processes require clarity and planning, which can disadvantage those with limited formal education or business experience. However, evidence suggests that when accessed successfully, the scheme delivers strong economic returns. Independent analysis estimates that for every pound spent, the programme generates over five pounds in value for the UK economy.

Liang’s story in Liverpool is ultimately not just about jewellery or retail success. It is about how targeted public finance can unlock private initiative and create employment where none previously existed. What began as a small loan to two founders rippled outward into jobs for artisans, placements for students and contracts for local suppliers.

As the UK continues to confront questions of job creation, regional inequality and access to opportunity, the Start Up Loans Scheme offers an important lesson. Employment does not always have to be delivered from the top down. With the right mix of credit, support and institutional backing, it can be built from the ground up by people who are given a genuine chance to succeed.

This article is written by

Pola Bhattacharjee, EICBI Business and Trade Research Intern