Government-backed bank fuels entrepreneurship for unemployed Brits
The British Business Bank has announced that nearly £150m in loans has been handed to unemployed people to help them start their own businesses since 2012.
The figure represents 22 per cent of all finance issued through the government-backed ‘start-up loans’ programme, which aims to support entrepreneurs who may find it difficult to secure funding from traditional high street lenders.
The move coincides with the launch of a new ‘Fresh Start Guide’, in partnership with the Department for Work and Pensions (DWP) and HMRC, designed to help unemployed people explore self-employment as a viable career path.
The guide will be distributed across over 600 job centres and through 25,000 specialist work coaches, offering advice on researching business ideas, accessing finance and understanding how self-employment interacts with welfare benefits
A new guide for entrepreneurs
The British Business Bank said the guide aims to provide those considering self-employment with a step-by-step framework to start their own business, alongside existing jobcentre support, the business support helpline, and the start-up loans programme.
The initiative will also form part of their service used to assist workers affected by large-scale redundancies, and will be shared with around 200 external organisations that work with the DWP.
The government said the move reflects a growing trend in self-employment. According to official figures, solo self-employed workers contributed £366bn to the UK economy in 2024, up from £331bn in 2023 – or roughly £87,000 each on average.
One of those supported by the start-up loans programme is Kristian Howell, who was unemployed for eight years.
After being turned down by high street lenders, Howell secured funding through the British Business Bank to open Vine and Vibe, a 6,000 sq ft indoor greenhouse and botanical coffee shop in Pembroke.
“Getting back into work after being unemployed definitely came with its challenges, but starting our own business has honestly been life-changing,” he said.
Government and bank reaction
Secretary of state for work and pensions Pat McFadden said the ‘Fresh Start Guide’ would help people “take control of their future” and unlock new opportunities.
“Starting your own business can be a powerful way to take control of your future, particularly after a period of unemployment,” he added. “By backing aspiring entrepreneurs, we are not only encouraging people to turn their ideas into reality and move into fulfilling work but also strengthening and diversifying our economy under our plan for change.”
Louise McCoy, managing director of start-up loans at the British Business Bank, said the guide reflected close collaboration across government departments.
“The Fresh Start Guide is a great example of cross-government working and is needed to support those who may not think of entrepreneurship as an option for them,” she said.
“By getting the guide in front of people who are unemployed, it could help make a difference, improving not just individual lives, but the wider economy.”
Entrepreneurship in economic recovery
The move comes as policymakers look to small businesses to drive the next phase of growth, amid a backdrop of stubborn inflation and weak confidence among SMEs.
While the UK’s start-up ecosystem has shown resilience, with record venture funding earlier this year, many micro and early-stage entrepreneurs remain reliant on support to access finance and training.
By focusing on self-employment as a route back to work, the DWP and British Business Bank are betting that entrepreneurship can also be part of the answer to the UK’s productivity and employment challenges.
However, success will depend on whether these new entrepreneurs can sustain their ventures in a still uncertain economy.