Businesses in the early stages of their start-up journey can be better served by existing funding options rather than the temporary measures implemented during the coronavirus crisis, according to an expert.

The government, in conjunction with lenders, has launched a series of relief funds aimed at supporting businesses large and small through the coronavirus pandemic. But while these funds are useful to some companies, Virgin StartUp’s Head of Funding and Support, Lissa Gillott, says the Start Up Loan scheme is still as relevant as ever, particularly for founders in the early stages of their entrepreneurial journey.

Lissa said: “Start Up Loans are absolutely key for people and businesses who are in the pre-start phase, and people who are just starting out.  More so than ever at present we are working with entrepreneurs who are keen to start new businesses, taking advantage of the changes that we are seeing all around us.

“The current funding relief options require founders to submit trading figures or self-certify as to what you will earn. And at the moment, these are due to end in September.

“With a Start Up Loan, we’re looking at the viability of the business or idea and we’ll be around after these relief funds have gone.”

Under the Start Up Loans programme, founders can borrow between £500 to £25,000 to grow their business. It is classed as a personal loan, so is based on individuals rather than companies, which means a business with multiple founders can access funds upwards of £50,000. There’s no minimum trading requirement and no set-up fee or early repayment penalties. Founders can borrow over 1-5 years at a fixed interest rate of 6%.

But it’s the complementary extras which give Start Up Loans a higher standing for founders, particularly when accessed through Virgin StartUp.

“With other loans, you don’t get the support pre- or post-loan,” Lissa added. “If you hit a bump in the road, you will get the help you need.

“Before founders are able to obtain the loan, we match them with a Business Advisor. These are people who have been in the same boat to them; starting out and running their own businesses. They act as a critical friend to talk through business plans and make sure everything is sound. A friend might say a business idea is great and think they are being supportive, but a Business Advisor will be able to challenge it in the right areas and make sure it will work.

“It’s not just about responsible lending, it’s also about giving the right level of support to a business. It’s not in our interest to give people more funding than they require in order to get their idea off the ground. 

“And once you are successful and draw down the loan, you become part of our Funded Club where we will help you to upskill in all of the ways you’ll need to in order to run a successful business. You might not be an expert in marketing, finance and so on when you start out, so we will team you up with experts in these fields to help you with this.

“We give you the opportunity to join forces with like-minded entrepreneurs to hear about and learn from their own experiences.

“Then, after six months, founders get the opportunity to be matched with a mentor, who works with them one-on-one to make sure the business is in the best possible position to succeed.

“You wouldn’t get this level of support from a bank – or you may even have to pay for it.”

Latest figures show Virgin StartUp has supported more than 3,500 entrepreneurs, lending more than £45m in the process.

The figures also showed the majority of loan recipients (73%) have businesses that are still trading, with 75% of those working full-time in their new venture. Just over a quarter (26%) of the businesses funded by Virgin StartUp have seen an annual turnover of more than £100,000, with 4% seeing turnover of over half a million pounds a year.

And with the average start-up employing three additional workers, it is estimated more than 8,000 further jobs have been created through its work.

With so many businesses supported over the last seven years, it’s understandably hard to pick out favourite stories from the Virgin StartUp community, but Lissa is particularly proud of the organisation’s role in supporting the alcohol-free beer brand, Freestar, and the foodie entrepreneurs at London Smoke & Cure.

And it’s a testament to the level of support that so many members of the Funded Club stay around to help others following in their footsteps.

Lissa added: “We have a number of founders who have received Start Up Loans who are now mentors to others, and many who give their expert advice through events and webinars. It often feels like a family. Virgin is very good at creating these family environments, largely as we have a real family at the core.

“There are so many opportunities that open up across the Virgin ecosystem, with the likes of Virgin Red, Virgin Media and Virgin Voyages, for example."

So if you're looking for both financial and real business support, now's as good a time as any to access a Virgin Start Up Loan. 

Find out more about how a Start Up Loan from Virgin StartUp could transform your business today.