PRIME Initiative

The High Street banks are by far and away the main source of start-up loans in the UK. But they won’t always lend to older people, particularly if you have a poor credit history or no collateral. So here we list some organisations that might be worth approaching if the banks have turned you down.

Most are CDFIs - non-profit organisations running a loan scheme to level the playing field for some particular group or to encourage business to set up in a particular area.

Q: What’s a CDFI?
A: A Community Development Finance Institution - a kind of small non-profit bank specifically set up to help those who cannot access money from mainstream banks and building societies. CDFIs in the UK are recognised in law and properly regulated. More from www.cdfa.org.uk

Coverage is patchy. CDFIs are relatively new in the UK and have not yet reached many parts of the country. Because CDFIs generally will only lend to those turned down by conventional banks they don’t compete with them, instead reaching out to customers the banks don’t serve. As a result the big banks generally don’t see CDFIs as rivals, and indeed have actively supported some CDFIs in getting established.

Typically the loans available from CDFIs are “loans of last resort”. You often have to have been turned down by a regular bank before you can apply. Interest rates are usually similar to those you would have to pay for a business loan from a conventional bank, but they do vary considerably - from a low of 3% to a high of around 30%.

Loans from even the most charitable CDFI are still loans that need to be paid back to keep the fund going - they are not grants. So the businesses people are proposing have to be sustainable and viable in exactly the same way as if you were approaching a commercial bank.

The CDFI will check out each application in businesses terms - indeed possibly more thoroughly than a conventional bank would, because the applicant usually isn’t putting up collateral such as a valuable house.

This makes getting a loan through schemes of this type generally slower than going to a bank. CDFIs are interested in whether the business will succeed, not just in how much your house can be sold for should it fail,

You can find a much longer list of CDFIs - many of them serving very specific geographic areas, from the CDFA, which is the sector’s umbrella body. Here we concentrate on an illustrative selection known to PRIME. Those indicated as PRIME partners have a specific commitment to helping the over 50s set up in business.

Aspire Micro Finance
Available in: Belfast, Newtownabbey, Mallusk, Lisburn and Derry/Londonderry areas of Northern Ireland. Aspire uses a micro-finance approach for deciding who to loan to, which means that it first lends small amounts to establish trust. If they are paid back on time you can apply for larger loans. Aspire prefers to deal with clients who are already trading, even if just in a small way.

Bristol Enterprise Development Fund
Available in: Bristol, Bath and the rest of the former county of Avon. Won’t lend to businesses involved in gambling, drinking, clairvoyancy or any activity which may offend public taste. Does do expansion loans for firms that have been trading for more than 12 months, as well as start-up loans.

Capitalise Business Support
Available in: Sussex including Brighton & Hove, and parts of South Kent. Capitalise is a subsidiary of Ten Sixty Six Enterprise Limited, the local enterprise agency for Hastings and a PRIME partner.

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1. Business Link
Business Link is a government-funded chain of advice shops located throughout England. Different arrangements apply in other parts of the UK.These government-backed agencies will generally also know about any public-sector grants for business, although these are much less common than many people believe - and often have strings attached.You can find your local Business Link from the link above. The web site also has a good section about the different options for financing a start-up business. For local sources of start-up finance, including CDFIs operating in your area, Business Links are also worth contacting.

2. Business Eye
The equivalent of Business Link in Wales. You can find your nearest office from the map on the link above.

3. Business Gateway
Government-funded business advice network for Scotland. The link above explains the sorts of finance, loans - and sometimes even grants, available in Scotland. The banking laws are different in Scotland, so many schemes operating in England aren’t available north of the border. For more on Scottish business support see here

4. Northern Ireland
A free Start a Business Service is available right across Northern Ireland. It includes help with finding finance.

More than 20 of the Rushcliffe District’s over-45s braved the Nottinghamshire snow and ice yesterday. They were taking advantage of the work, training and self-employment advice on offer at PRIME’s final event in the 45+ rural enterprise road show, which started last October.

Despite the low expectations for turnout due to the adverse weather conditions, enough visitors made the effort to make this a lively and busy afternoon at the Bingham Methodist Centre. This effort was rewarded with high quality help for those interested in starting or developing a business, and for people looking for help with career changes or training.

Across the 11 events, over 380 people have now benefited from the support and assistance offered by over 50 organisations that have taken part in this programme, and have been introduced to the wealth of support for mature entrepreneurs in the East Midlands.

PRIME’s next events are planned for late March, focusing on Enterprise Awareness in ethnic minority communities in disadvantaged areas of Nottingham City. These events will follow a similar format to the rural roadshow, in partnership with First Enterprise Business Agency, and supported by emda, New Business New Life and the Phoenix Development Fund.

The East Midlands 45+ Rural Enterprise Awareness project has been funded by East Midlands Development Agency, Government Office East Midlands, CREATE (a European Social Fund Equal Project) with additional support from numerous partner organisations.

Peter Bennie
Regional Development Manager - East Midlands
PRIME

www.primeinitiative.org.uk/whatsnew/t_news.php

PRIME has released the results of its year-long outreach project on South Tyneside. The project was designed to find out whether putting a PRIME enterprise worker on the ground would help people start up in business.

The answer is yes, but the project also produced more evidence of the problems that people face when trying to move into self-employment after a period of worklessness. In particular nonsensical delays in being allowed to start on test-trading schemes , and uncertainty about when benefits would end when trying to start a business were strong disincentives to try.

Nonetheless, several people went ahead anyway. Christine, dismissed from her job because of ill health at the age of 51, was back within a year with her own catering business, which now employs three people. She encountered problems moving from Incapacity Benefit to self-employment, with mixups over her entitlement while attempting to test trade to prove the idea. Fortunately she was sufficiently confident to move into full trading just as it looked like her IB would be cut.

South Tyneside, which is situated on the south bank of the river Tyne downstream from Newcastle where it meets the sea, was chosen for the project because it has plenty of workless 50-somethings, many of them former industrial workers. The area also has a good range of business support provision and colleges offering often-relevant courses.

One of the key tasks for the outreach worker was to make people aware of what was available, and to help them work the system so they got on the right course or programme while keeping the Jobcentre happy.

You can download the full report from the link below.

PRIME has completed the final phase of its research into obstacles to self-employment among the over 50s in the East of England.

The main barriers according to the people who agreed to take part in the polls and interviews were:

Awareness: many people simply don’t think of self-employment as an option for themselves. They may not know any entrepreneurs themselves, and no one may have suggested it to them as a serious possibility.

Finance: there are several problems here, the most obvious being a lack of working capital for the early stages of the business and an inability or unwillingness to borrow it.

But an even greater barrier to more people setting up in business for themselves is the reluctance to risk existing savings. Of course this reluctance may be fully justified - it may be prudence rather than a mistake. But it does seem to increase with age.

Risk to existing security afforded by benefits or a low-paid job. There is a kind of poverty trap here that hits the over 50s especially hard, because if the business fails it may be difficult to get another even low-paid job because of the unwillingness of many employers to take on older people.

If you’ve been on Incapacity Benefit previously you may have to sign back on instead to Jobseekers Allowance, which gives you less money and has more conditions attached. Plus you are likely to have lost your existing Council Tax and Housing Benefit entitlement, and will have to start the whole means-tested claims process all over again.

Proximity of retirement affording insufficient time to get the business established and to repay any funds borrowed or to recover savings invested.

Worries about health of self and others. Caring for a partner or relative is one of the major reasons people stop working. They may later want to start working again, perhaps on a part-time self-employed basis. But it is hard to get a new business going successfully on a part time basis, or if you are constantly having to stop and start due to your own or your partner’s ill health. Again, the worries may be justified.

Lack of confidence in own skills or self-worth. This proved a particular problem for people who hadn’t worked for some time but now wanted to return in a self-employed role. Often it isn’t justified, and can be overcome with a bit of training, support and talking to other people. But making sales calls is something a lot of people report finding difficult.

Ability to earn from informal economy without going official. This is an opposite problem to many of the others. People are already working in the black, grey, shadow or informal economy - call it what you will, the one where you don’t tell the authorities. Once you find you can make money this way it is hard declare yourself self-employed officially. There may be good reasons to do so - such as the ability to advertise and market more actively, to borrow money and to apply for any grants or other assistance that is going. Plus it’s more secure.

The report also suggests fixes to some of these problems, and possible approaches to overcoming barriers that can be researched or even tried out in pilot projects. PRIME’s study was carried out as part of the East of England Development Agency’s Investing in Communities programme, which aims to bring groups in the region that suffer a disadvantage in the labour market back into the world of paid work.

The full report can be downloaded from the PDF link below.

www.eastspace.net/investingincommunities

PRIME has published a report called “Female Entrepreneurship among older women in Cheshire”. It looks into the attitudes and motivations of women aged over 45 living in rural areas to setting up their own businesses

The report is available for free download from the links below - there are separate files for the main report and two more detailed appendices.

The report is based on the experiences of the first 42 women to attend one of the “Developing a Business Idea” workshops PRIME has been running recently in Cheshire.

These women were at the thinking or pre pre-startup stage. This tends to last longer for women than men - women often have to wait for practical barriers to get out of the way before they can start a business, and they tend to spend more time planning.

Despite this, fewer than one in five of the sample had gone to a Business Link. And only half had received advice from any source that they considered helpful. Most sought advice from friends, relatives or acquaintances.

What emerges from the study is that some impartial help at an early stage and the opportunity to network with other business people would be most valuable. Many of the women needed some endorsement of their business ideas before feeling confident enough to approach mainstream sources of business support.

PRIME and ATL, the leading enterprise agency for black and other minority ethnic people in West Yorkshire, have jointly produced a report into the business support available to all over 50s in the region.

The report, by Caroline Leighton, can be downloaded from the information link below. It describes and gives contact details for the support agencies in the region. It also has some case studies about local people who have become self employed later in life, and makes some recommendations.

The report forms part of preparations for PRIME to become more active in the region, so it also sets out to identify gaps. If you’ve set up a business or become self-employed recently in West Yorkshire and would be willing to share your experiences please email us at prime@ace.org.uk

www.atlenterprise.co.uk

The first report by the Enterprise for All Coalition (EfAC) makes several recommendations to government about how to achieve a more level playing field for people hoping to start or sustain a small business in the UK. At the moment the availability of good support across the country is still very much a post-code lottery, and some groups face severe additional disadvantages that can and should be removed.

The Enterprise for All Coalition consists of: PRIME (the Prince’s Initiative for Mature Enterprise), Prowess (Promoting Women’s Enterprise Support), SEC (the Social Enterprise Coalition), BTEG (the Black Training and Enterprise Group), the CDFA (the Community Development Finance Association), and the NFEA (the National Federation of Enterprise Agencies).

Speaking on behalf of the group, Jackie Brierton of Prowess said “For the first time, six national organisations have come together with one clear message; if gender, age, ethnicity, finance or location hold enterprising people back then we still need central and regional government resources and political will to make a lasting difference. We believe the acceptance of our recommendations will significantly help government to achieve its economic and social goals, and we look forward to working with senior officials to make this happen.”

The report was written for the coalition by independent policy-analyst Andrea Westall, former deputy director of the New Economics Foundation. Copies can be downloaded in PDF format from the link below, or email prime@ace.org.uk if you want a paper copy.

PRIME has opened www.primebusinessclub.com, a web site aimed squarely at people starting or running their own businesses. The new site will concentrate on providing practical help to people in the PRIME age group and is designed for repeat visitors.

The site you are currently on, wwww.primeinitiative.org.uk, will increasingly function as a first contact and “About PRIME” site, and will be aimed at a wider audience including researchers and policy makers.

The need for the new site has come about as we have increasingly added material to our original site to better support those actually setting up in business. But the structure is not ideal, and much of the material is difficult to find.

The new site is divided into clearer sections and has better navigation and search features, This will allow us to keeping adding more material without it getting lost to view.

It already has fuller listings of events you can attend, more case studies of people over 50 who have recently set up their own businesses, and properly organised discussions forums where you can talk to others who are setting up or running new businesses.

The business information includes free courses and an offers section. And it’s much easier to find events and sources of business advice in your own part of the country.

www.primebusinessclub.com

PRIME has released a free and updated guide to Working Tax Credit for the coming financial year.

Working Tax Credit is a kind of reverse income tax that you should get if your household income falls below a certain level.

It is something you are entitled to as a working taxpayer and it is run as part of the tax system by the HM Revenue & Customs.

This PRIME guide explains how the scheme applies to self-employed people over the age of 50. Despite the bad press Working Tax Credit often receives, PRIME believes that for the self-employed it can be a valuable lifeline, so it’s worth checking out this brief guide to see if it might be useful to you.

So download “Working Tax Credit - a brief guide for self-employed people aged over 50″ from the Information File link below.

This year we have also explained the basics of Child Tax Credit, as an increasing number of people over 50 have responsibility for looking after children - about a quarter of those contacting PRIME according to other research we will be publishing soon. Thanks to everybody for filling in the forms.

The guide provides examples for the tax year starting on the 6th April 2007 and ending the 5th of April 2008. The numbers for the current tax year 2006 to 2007 are similar but you get slightly less money.

Otherwise details of the scheme haven’t change significantly. The welcome hike in the “income disregard” introduced this year will continue into FY 2007-2008, which will mean far fewer people facing hassles and demands to return overpayments if their circumstances change.

Fears on this point discouraged many from claiming, which is a pity as Working Tax Credit (and Child Tax Credit) can help out with your basic living expenses if your business is going through a bad patch. Working Tax Credit is also very useful for those new to self-employment whose businesses are not yet making much money.

There is no universal grant for starting a new business in the UK. Working Tax Credit is as close as the system here gets to encouraging small business start ups. So it would be silly to ignore it if you qualify.