Evaluation of Start Up Loans

Launched in 2012, the Start Up Loans programme provides personal loans to an individual for the purpose of starting up a new business or developing an existing early stage business. In addition to the finance, the programme offers pre-application support and post-loan mentoring advice.

The British Business Bank commissioned SQW to refresh the evidence on the programme, focusing on loans drawn down by two cohorts, one in financial year 2018/19 and one in 2021/22. The overarching aim for the evaluation was to provide a robust assessment of the Start Up Loans programme, comprising a process, impact and economic evaluation. The report finds the programme has made good progress against its objectives and intended outputs, outcomes and impacts.

The report’s main findings include:

• Businesses established by Start Up Loans beneficiaries had higher survival rates than comparator businesses. During the first five years, the businesses of loan recipients from the two cohorts demonstrated higher survival rates than comparison groups - by year 5 this was higher by between four and 26 percentage points vs comparison groups.
• In addition to the employment of the loan recipients themselves, one additional employee job was created for each loan, on average.
• Loan recipients’ businesses had experienced stronger growth since incorporation than comparator businesses, in terms of assets and employment. On average, beneficiaries’ businesses were found to have experienced, between incorporation and the latest datapoint, a c. 34% cumulative higher growth in assets and c. 15% cumulative higher growth in employment than the comparator group.
• The majority of loan recipients assessed their personal and business confidence at the time of the survey to be higher than when they first applied for a loan. The programme was seen as an important factor in enabling these improvements for many survey respondents. Evidence from the survey and the case study research suggested that personal development benefits are often pertinent even if the enterprise does not succeed.
• Just over two-thirds of the finance provided by Start Up Loans would not have been provided by mainstream providers (i.e. a finance additionality ratio of 68%).

A full multi-year evaluation of the programme was also undertaken between 2015 and 2019, with the previous evaluation published here.