Chris Kelly, of Bury St Edmunds accountants Jacobs Allen asks: Is entrepreneurship the route out of the impending recession?

Small businesses don’t often make the headlines and their importance to the economy often seems under-appreciated by politicians.

Starting or growing a small business during a recession may seem counter intuitive. However, difficult economic circumstances can produce the opportunities for a newer business to prosper.

One famous example is Airbnb, which started in the recession of 2008 with an air bed being rented out in a living room.

Opportunities arise for various reasons:

• A recession can produce changes in customer behaviour as they look for cost savings. New businesses can be more agile and innovative in responding to these changes.
• Individuals may look to supplement their income by starting small businesses as ‘side hustles’ alongside their main employment.
• Older business owners may decide it is the time to retire and look to sell or wind up their business. A start up could look to acquire one of these or to fill the gap it leaves behind.
• Some may be forced into self-employment due to redundancy.
• Certain sectors such as healthcare are less sensitive to the general economy economic climate.

Starting or growing a business usually requires some element of finance in the form of a loan. Loans have historically been difficult to obtain from banks for start ups and newer small businesses.

However, government-backed start up loans are available to those that have a viable business idea but no access to finance.

Government backed start up loans

These start up loans are available from £500 up to £25,000, with a maximum of £100,000 possible for a single business if four business partners or directors each personally apply.

The main criteria are that you are UK based and your business has been trading for less than 36 months.

The terms are 6 per cent fixed rate of interest over 1-5 years and no fees. They are unsecured personal loans.

The loans come with access to free mentoring. This is very useful as statistics show that new business are much more likely to be succeed if they have obtained professional advice and training early on.

Jacobs Allen Chartered Accountants are patrons of MENTA, the Suffolk and Norfolk based Enterprise Agency.

MENTA provides free training packages to people looking at starting a new business and can assist in accessing these start up loans.