South West sees surge in number of start-up loans since pandemic

Five years since the first Covid 19 lockdown, data from Start Up Loans shows there has been a surge in aspiring entrepreneurs taking out finance to bring business plans to life.

In the five years since the start of the pandemic, there has been a 30% increase in the number of first loans in the South West delivered by the Start Up Loans programme, which is part of the British Business Bank, compared to the five-year period prior to the pandemic.

Figures show that there have been 3,938 Start up Loans in the South West with a total value of £52.5m delivered since the start of the pandemic. This compares with 3,027 loans valued at £34.4m in the five years before.

This amounts to a £18.1m increase in the total value of loans between the two periods. The average loan value to entrepreneurs also increased by £1,974, or 17%, from £11,358 to £13,332.

Start Up Loans data on loan volume applications shows 2020 was a potentially ‘transformational’ year for UK startups. In the financial year that ended just around the time lockdown was first introduced, 8,652 Start Up Loans supported UK start up businesses. The following year this rose to 11,322, a 31% increase, and numbers have remained higher than pre-pandemic levels ever since.

The five year period since the first lockdown has also seen a significant increase in Start Up Loans finance provided to business owners from a Black, Asian or Other Ethnic Minority background and early-stage business owners. Across the UK, the proportion of loans to recipients from an Ethnic Minority background increased 5.39%, meaning it is now 20%.

The pandemic lockdowns brought normal life to a temporary halt and offered a unique opportunity for people to rethink their futures.

This prompted many to seek alternative careers and pursue their dreams, like Chloe Widdows and Jim Thomson, both former teachers who had often talked about the idea of opening their own deli to showcase the very best food and drink on offer in their area.

Chloe said: “After going back to school after the covid pandemic, we just had this feeling that we really wanted to do this now. We felt that there was a way we could celebrate all of this wonderful produce that we have right here on our doorstep.

“I think Covid really heightened the feeling of ‘life’s too short’ – you really just never know how long you’ve got left here. Prior to the pandemic, we just rode the wave of life because that’s what everyone did. But when Covid hit, it really brought into focus what really matters in life. It definitely made us think, ‘what are we waiting for?”

So Chloe and Jim took the plunge, left their teaching jobs and each applied for a £15,000 Start Up Loan through SWIG Finance to open The Acorn café, deli and wine bar situated in Yeovil.

The business opened in September 2023 and The Acorn has evolved to include a Friday evening à la carte service, regular cheese and wine tasting evenings and popular monthly supper clubs all showcasing the best West country produce.

Chloe added: “The Acorn would have been an impossibility without the Start Up Loan – or a lottery win! Without it, we wouldn’t have been able to do this for at least another five years. You have to act quickly when opportunities arise, and that’s exactly what the loan enabled us to do.”

Richard Bearman, co-chief banking officer, British Business Bank, British Business Bank: “When I think about the Start Up Loans programme, the pandemic was a real pivotal moment. So often I meet business owners and their stories start with how lockdown was the chance to stop and really think about what they wanted to do and achieve.

“We saw a huge increase in the number of loans during 2020 and into the early part of 2021. Although some of that demand for finance has understandably cooled off, we still see a lot more people seeking Start Up Loans finance for a business. In that respect the shock of lockdowns could well have contributed to a change in how potential business owners thought about the opportunities of entrepreneurship.”

Start Up Loans is a government-backed programme that offers fixed-interest loans and mentoring to entrepreneurs in the UK. Since its inception in 2012 the programme has delivered over £1.2 billion in funding to more than 120,000 entrepreneurs nationwide, and £102m to 10,358 entrepreneurs in the South West.