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9 months ago

UK Start-Up Loan Stats Revealed

Start-up loans can be useful for newer businesses requiring additional funding. These loans allow business owners the ability to build up the initial capital required to launch or run their new company. From investment in resources to building a business credit history, these loans can lend new businesses a helping hand financially.

However, not every new business chooses to take out a start-up loan to launch or run their new business. This leads to the question: How many Government Start-Up Loans are taken out annually across the UK, and how does this differ by region?

To explore this further, we at BusinessComparison obtained information from the British Business Bank through freedom of information (FOI) requests. We did this to explore the number of Start-Up Loans being issued while investigating which city is home to the most new businesses.

Regions and Start-Up Loans, Which Area has the Most?

To understand which regions had the most and least amount of Government Start Up Loans issued throughout the past four financial years, we requested the information directly from the British Business Bank. In our freedom of information request, we asked for the number of new companies that accessed and took out start-up loans from the Government, broken down by region.

The investigation produced some interesting results. As you may expect, London was revealed as the region with the largest amount of start-up loans issued – totalling 1,491 in the 2022/23 financial year.

On the other end of the scale, Northern Irish businesses received the lowest number of start-up loans from the Government – acquiring just 149 in 2022/23 and 93 so far this financial year. Despite this, Wales was the UK region recording the lowest amount of start-up loans so far in 2023/24 (62).

Further examination of the statistics revealed that – aside from London – only two other regions had been issued over 1,000 loans in the 2022/23 financial year. These regions included the South East with 1,217, and the North West with 1,091.

Additionally, these three regions are the only areas to be awarded over 400 start-up loans so far during this financial year. London businesses have accrued 476 start-up loans so far this financial year while the North West (438) and the South East (424) regions followed closely behind.

Overall, the number of start-up loans being issued across the UK has been gradually decreasing year on year. For example, the 2020/21 financial year saw 11,318 start-up loans issued from the Government to new businesses. This figure decreased to 10,372 in 2021/22 and again to 9,536 in 2022/23.

It’s safe to say that the past year and beyond has proved extremely turbulent for businesses operating in almost every sector. The constant fluctuation of interest rates and inflation could discourage new business owners from launching their venture or taking a Government start-up loan to avoid repaying added interest.

We also wanted to look into the data comparing the number of start-up loans in each region to the population of that area. For that reason, we’ve calculated the number of start-up loans in 2022/2023 per capita. We used a calculation per 100,000 people.

When looking at the number of start-up loans per capita, it showed that the region with the highest number of government loans per 100,000 people is the North West, with 5.9 start-up loans. This is followed by Greater London (5.4), and the South West with (5.2).

The data sourced from the 2022/23 financial year also revealed that £120 million was paid out to businesses via start-up loans. In years previous, this figure has been slightly higher, with £137.3 million in 2020/21 and £130.7 million in 2021/22.

Region-specific data allows us to explore the areas of the UK being paid the most via start-up loans. Understandably, the regions with the highest amount of issued loans had the largest amount of money paid out. This included London, where £18.8 million was given to start-up companies in 2022/23, while the South East region received £15.4 million spread across its new businesses during the same financial year.

More recently, this financial year, London start-ups have received £6.2 million - the most of any region thus far. Following closely behind, the North West has already received £5.9 million in start-up loans this financial year – making them the second-highest region.

Interestingly, Northern Ireland is seemingly on track to eclipse last year’s funding when the region received £1.8 million in loans to help businesses. So far this financial year, Northern Ireland has received £1 million, with a large period of the financial year still to come.

Overall, in the past four financial years (2020/21 - 2023/24), the Government has paid out a total of £428.2 million to aid new businesses. As interest rates continue to worry businesses and consumers alike, it will be interesting to see how the number of loans being issued continues to trend.

To the Government, start-up loans being made available to qualifying businesses is significant for a number of reasons, including instigating economic growth, regional development and reducing unemployment. Start-up loans could be viewed as beneficial for the Government - helping boost the UK economy while ultimately receiving the loan back from businesses.

UK Cities Boasting the Largest Number of New Companies

Aside from the British Business Bank, we at BusinessComparison contacted the councils of the top 50 largest UK cities by population to find out how many VAT/PAYE-based new businesses there are in different UK cities.

To do this, we sent a Freedom of Information request similar to the British Business Bank requesting the number of businesses and new companies in each specific city. Overall, we received 25 responses with relevant data, while 8 councils were unable to supply the data requested.

This section allows us to visualise the ‘hotspots’ for new companies while comparing them to the regional data received above. Unfortunately, the City of London council was one of 8 unable to provide statistics on the number of new businesses in their area - we do know that London has the highest number of Government-issued start-up loans.

In terms of cities we do have data for, Northampton was revealed to have 8,993 start-up businesses as of 2023 - the largest amount out of all responses received. So far, 181 loans have been awarded to start-up companies in the East Midlands region, it’ll be intriguing to track how this figure grows throughout the rest of the financial year.

Elsewhere, it was easy to see why the North West recorded a large number of awarded start-up loans, with Manchester (4,245), Liverpool (2,735) and Blackpool (480) all registering high numbers of new companies in each city, respectively.

Interestingly, Coventry was discovered to have the largest number of start-ups compared to the total number of businesses. In total, Coventry City Council revealed that, as of 2022, there were 10,295 businesses with 5,053 new companies. They were also helpfully able to clarify that 81 of these companies had received a start-up loan in the 2022/23 financial year.

Let’s now look at the top ten cities for start-up companies from all of the FOI responses we received.

Please note that only the cities we received responses for are included in this table.

As seen above, cities from regions such as the North West, Yorkshire and the East Midlands are seemingly booming with many start-up companies. While the business landscape may be turbulent, it doesn’t seem to discourage many from launching their own company.

The Number of Start-up Businesses per Capita

While it’s incredibly useful to envision the areas with the largest portion of start-up businesses, exploring how these figures compare per capita around the UK helps to demonstrate how these figures correlate with population.

Here, we looked at the total number of start-up businesses to examine the number of start-ups per capita in each UK city and how population affects the data.

Firstly, we took a look at the cities with the highest number of start-ups per capita. It was interesting to discover that Northampton has the most start-up businesses per 10,000 people, ranking top once again.

The city has 8,993 start-ups and a population of 215,953, meaning per 10,000 people, there are 416 of these start-up companies.

Following Northampton, Bradford (220), Coventry (140), and Manchester (107) were the only other cities to have over 100 start-up companies per 10,000 people.

In contrast, Blackpool had the lowest number of start-ups per 10,000 people with 20, while Preston followed closely behind with 26 start-ups per 10,000 residents. Preston’s population meant that, although it has more start-up companies than Norwich and Middlesbrough, it actually has less per 10,000 people.

Overall, the top five cities for start-up companies per capita were:

  1. Northampton: 416

  2. Bradford: 220

  3. Coventry: 140

  4. Manchester: 107

  5. Glasgow: 50

The Number of Start-up Loans per Capita

Moving on, we also examined each region of the UK to find out which areas saw businesses being awarded the most start-up loans per 10,000 people.

For this section, we also examined data from the past four fiscal years - since 2020/21, to analyse the number of loans per capita in each UK city.

The data found that despite Greater London’s massive population of 8.7 million, the region was awarded 5,696 loans, meaning there were 6.5 loans per 10,000 residents – the highest out of all UK regions.

The next highest was Yorkshire, with the region receiving 5.8 start-up loans per 10,000 people. Moreover, Northern Ireland saw the lowest amount of loans per capita, with 2.9 per 10,000 inhabitants since the 2020/21 financial year.

Although the East Midlands received a higher amount of start-up loans in comparison to Wales, population statistics meant that the region received less per 10,000 residents – 3.9 loans in the East Midlands compared to 4.2 in Wales.

In total, the top five UK regions for start-up loans per capita were:

London: 6.5

Yorkshire: 5.8

North East: 5.7

North West: 5.7

South West: 5.5

As we expected, this section of the study demonstrates that the areas with high numbers of start-up companies had a higher figure per capita when it came to loans, however, it was interesting to see how the population affected the data.

Final Thoughts

Our investigation into start-up loans yielded some fascinating results. In particular, it was valuable to learn which regions were receiving the highest number of start-up loans and how this compared to the number of new businesses in specific cities around the UK.

With the trend seemingly highlighting a drop in the number of start-up loans being awarded each year, it will be interesting to see if this trend continues as interest rates continue to fluctuate across the course of the year.

Methodology

We wanted to explore statistics surrounding Government Start-Up Loans around the UK. To do so, we sent a Freedom of Information request to the British Business Bank asking for the number of start-up loans awarded by each UK region, of which they provided statistics for the past four financial years.

We also sent Freedom of Information requests to the councils of the top 50 largest UK cities by population - sourced from World Population Review - requesting the number of PAYE/VAT-based businesses and the number of start-up companies in each specific city. Overall, we received 25 responses with data and 8 responses where councils were unable to provide the requested information.

To find out the number of start-up businesses and loans per capita in each relevant city, we divided the number of start-ups by the population before multiplying by 10,000. We retrieved regional population data from Statista.

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Sam White