Evaluation of Start Up Loans (British Business Bank)

Summary

• The Start Up Loans programme achieved an overall start-up rate of 96%, with 21 net new enterprises created and 36 net additional enterprises developed for every 100 people lent to in the evaluated cohorts.p.7
• Enterprises of the 804 survey respondents created an estimated 826 net additional employee jobs in their last completed financial year, equating to 1.03 net additional jobs per loan.p.7
• Survey respondents generated an estimated aggregate net turnover of £44.7m in their last reported financial year, representing £50-60k net additional turnover per loan recipient.p.7
• Across the four cohorts between 2018/19 and 2021/22, a total of 34,134 loans were drawn down, representing £442 million in total lending.p.23
• The programme demonstrated high value for money, with benefit-cost ratios (BCRs) for the 2018/19 cohort of 5.1 to 5.6 on unweighted benefits and 5.6 to 6.0 when adjusted for income weights.p.9
• Survey data indicated a finance additionality ratio of 68%, showing that just over two-thirds of the finance would not have been provided by mainstream financial institutions.p.7

Key insights

1. 1. Econometric analysis showed that loan recipients' businesses demonstrated higher survival rates than comparator groups by between four and 26 percentage points by year 5.p.7
2. 2. Beneficiary businesses experienced approximately 34% cumulative higher growth in assets and 15% higher growth in employment than matched comparator businesses since incorporation.p.7
3. 3. The proportion of self-employed individuals among respondents was nearly three times higher at the time of the survey than at the time of application.p.6
4. 4. Women accounted for 41% of all loan recipients across cohorts, substantially above the 20% proportion of majority women-led businesses in the 2022 UK Small Business Survey.p.21
5. 5. The proportion of loan recipients from Ethnic Minority backgrounds was 18% across cohorts, increasing from 15% in 2018/19 to 21% in 2021/22.p.21
6. 6. Average nominal loan size increased over time from £11,488 in the 2018/19 cohort to £14,315 in the 2021/22 cohort.p.23
7. 7. Take-up of post-loan mentoring was low, with under half of surveyed recipients offered mentoring and only about half of those taking it up.p.8