Management summary research study „UK government-backed start-up loans: Tackling disadvantage and credit rationing of new entrepreneurs“
The article contributes to the discussion about the effects of business start-up support for disadvantaged people in the labour market, including the elderly and the unemployed. The research carried out focuses on the survival rate of new entrepreneurs and the economic sustainability of entities that have received subsidized loans.
The empirical part is devoted to business entities from the United Kingdom, which were established on the basis of obtaining a preferential loan from the so-called start-up loan (SUL) scheme between the years 2012-2021. Survival, cost and benefit analyses were carried out based on information on 82,798 beneficiaries, representing a total of £759 in loans.
The study results show that the loan provided to start a business leads to the activation of disadvantaged people, and their business shows a relatively high survival rate. It turns out that such activation does not necessarily require direct subsidies but also works with financial instruments. It is, therefore, a question of whether existing programs operating on similar principles and offering support through direct subsidies could not be replaced.
Target Audience/Stakeholders: Public entrepreneurship and SME policymakers, entrepreneurs
Citation: Cowling, M. & Dvouletý, O. (2022). UK government-backed start-up loans: Tackling disadvantage and credit rationing of new entrepreneurs. International Small Business Journal, DOI: https://doi.org/10.1177/02662426221124733