May 17, 2013 - Rachel Miller
Micro-businesses – with less than ten employees – are the key to boosting the UK economy, according to Lord Young in his second report for the prime minister, Growing your Business: A report on Growing Micro Businesses.
Lord Young has made a number of proposals to promote growth among micro-businesses – a group that represents 95% of all businesses. This includes an expansion of the government's Start-Up Loan scheme making it open to all ages.
The Start-Up Loan scheme currently helps entrepreneurs aged 18-30 to get their businesses off the ground with a loan of around £4,500 and mentoring support. Some 3,768 loans worth around £16m have been issued since its launch in 2012. Now the scheme will be open to all from later this year.
James Caan, chairman of the Start-up Loans Company, said: "I welcome Lord Young's recommendation to remove the age cap for Start-Up Loans. Seeing the huge success of the programme to date leaves me with no doubt that there is significant demand from more mature individuals who want a chance at being their own boss."
Other proposals include an additional £230 billion worth of public sector contracts to be opened up to the smallest businesses. To make this possible, Lord Young has recommended the abolition of pre-qualification questionnaires (PQQ) on contracts under €200k across the public sector. Lord Young is also backing the idea of Growth Vouchers for established small firms.
In response to the report, Tina Boden, co-founder of Enterprise Rockers, which supports micro-businesses, said: "Less focus needs to be given to the 'start up' and more to the 'keep going' stage in business. If Growth Vouchers can be used by established micro-business owners to buy support from professional business advisers who have micro-business knowledge and experience, this scheme will be a fantastic opportunity for many to break down the barriers they are facing to move forward."
Lord Young said: "Growing our smallest businesses would transform our economy – they are the vital 95%. If just half of the UK's micro-businesses took on an additional member of staff, unemployment would be reduced to almost zero. We need to raise the aspirations and confidence of these businesses and give them the tools to grow."