UK government is expanding its start-up loans scheme, which offers young entrepreneurs loans of about £2,500 to help them start businesses.
The start-up loans scheme had originally been aimed at 18-to-24-year-olds, but is now being expanded to those aged up to 30.
To cater for the wider age band, the funding available for start-up loans will rise from £82m to £112m.
But the scheme, which was announced at the end of May, has only lent out £1.5m so far.
The Start-up Loans Company, which runs the scheme, said the relatively slow start was due to the time taken to set up local partnerships, but that the pace of loans had picked up during December.
The target is to lend all £112m by April 2015. More than 3,000 people have applied for the loans so far, but if the target is to be met then almost 45,000 entrepreneurs will have to take out the loans.
The expansion is due to be announced by Prime Minister David Cameron at an event in Preston later on Thursday.
“Start-up loans are an important part of my mission to back aspiration, and all those young people who want to work hard and get on in life, so this country competes and thrives in the global race,” he said.
“They are a great way to help this next generation of entrepreneurs get the financial help – and the confidence – to turn that spark of an idea into a growing, thriving business.”
But Labour’s shadow business secretary Chuka Umunna criticised the way the scheme was being delivered.
“With our economy flat-lining it’s essential that initiatives like the Start-up Loans scheme are delivered effectively if they are to provide real opportunities for our young entrepreneurs.
“That’s why it was disappointing that figures released at the end of last year suggested delivery of this scheme, like so many others from this government, was not living up to David Cameron’s rhetoric.”
Start-up loans have generally been welcomed by business groups, although there have been suggestions that the £2,500 on offer may not be enough to make a difference.
Young entrepreneurs are also offered advice to help them with their new businesses. The Start-up Loans Company is chaired by James Caan, who is best known for his appearances on the television programme Dragons’ Den.
“There has been a major shift in the way business is viewed by the public, and entrepreneurs are now seen as creative and exciting role models,” said Mr Caan.
“I am delighted to see that more and more young people are now looking to set up their own business.
“Start-Up Loans enable young people to harness their skills, and gives each budding entrepreneur not just a low interest loan, but also the help and support from an experienced mentor to guide them to success.”
The loans must be repaid within five years, and interest will be charged at the level of inflation measured by the the Retail Prices Index (RPI), plus 3%.
RPI in November stood at 3.0%.
The loans are part of the government’s attempts to reduce youth unemployment.
The most recent official figures showed that 17.9% of 16-to-24-year-olds who were not in full-time education were unemployed.