Five years since the first Covid 19 lockdown, data from Start Up Loans shows a surge in aspiring entrepreneurs taking out finance to bring business plans to life.
In that time, there has been a 10% increase in the number of first loans delivered in London by the programme, which is part of the British Business Bank, in comparison to the five-year period prior.
This amounts to a £19.5m increase in the total value of first loans between the two periods, an increase of 25%.
Start Up Loans data on loan volume applications shows 2020 was a potentially transformational year for UK startups despite the challenges many small business owners faced.
In the financial year that ended just around the time lockdown was first introduced, 1,296 Start Up Loans supported businesses in London.
The following year this rose to 1,943, a 50% increase, and numbers have remained higher than pre-pandemic levels ever since.
The pandemic lockdowns brought normal life to a temporary halt and offered a unique opportunity for people to rethink their futures and pursue their dreams. This prompted many to seek alternative careers, like business owners Celia Foot and Sophie Salisbury, who founded Reia in August 2020, which makes refillable hand and bodycare products without single-use plastic packaging.
Co-founders of Reia, Celia Foot and Sophie Salisbury, said, “Lockdown provided us with the opportunity to bring our idea to life. We had been researching how to eliminate single use plastic from the bathroom while working other jobs, and then lockdown gave us that moment of reflection and clarity, that led us to pursuing Reia full-time.
“It’s not surprising to hear that others used the time to follow their own ideas. We took out our loan in August 2020 and are both now employed by our company, which wouldn’t be possible without the financing from Start Up Loans”.
The five year period since the first lockdown has also seen a significant increase in Start Up Loans finance provided to business owners from a Black, Asian and Other Ethnic Minority background. Nationally, the proportion of loans to recipients from an Ethnic Minority background increased by 5.39% to 19.8%.
About one in 10 (10.55%) of those getting finance are aged between 18-25, while 12.22% are aged 50 or over; so together these two age groups account for more than a fifth of Start Up Loans. The largest age group are those with more career experience, with 56% aged 31-49 years old.
The age profile of business owners using Start Up Loans to finance their start up or early-stage business has remained consistent pre and post Covid lockdowns.
Richard Bearman, Co-Chief Banking Officer, British Business Bank, British Business Bank said, “When I think about the Start Up Loans programme, the pandemic was a real pivotal moment. So often I meet business owners and their stories start with how lockdown was the chance to stop and really think about what they wanted to do and achieve.
“We saw a huge increase in the number of loans during 2020 and into the early part of 2021. Although some of that has demand for finance has understandably cooled off, we still see a lot more people seeking Start Up Loans finance for a business. In that respect the shock of lockdowns could well have contributed to a change in how potential business owners thought about the opportunities of entrepreneurship.”
Start Up Loans is a government-backed programme that offers fixed-interest loans and mentoring to entrepreneurs in the UK.
