The top 5 sectors for getting a start-up loan

Yasmina Siadatan looks at Start Up Loans’ data and reveals the most successful sectors for securing a loan – and where they’re getting them

Over the past 12 months, the UK has seen record breaking numbers of start-up companies launching.

Since Start Up Loans began in September 2013, we have provided loans to over 16,000 new businesses across the nation.

The top five regions currently taking out Start Up Loans are:

  1. Greater London with 33%
  2. The North West borrowing 15%
  3. Yorkshire and Humberside received at 9%
  4. The West Midlands received 8%
  5. And the South East also received 8% of our total funding.

Of all our loans, 37% are taken out by women, in fact in the start-up arena there is a 72% increase in female entrepreneurs.

Women in employment is at a record high with over 14 million now in the workplace. This could go some way to explaining why, for the second consecutive year, fashion and beauty is the largest sector Start Up Loans is funding.

1. Fashion and beauty start-ups

These are industries traditionally dominated by women. We provided 2,323 loans in the last year alone to new fashion and beauty businesses.

This appetite for beauty and fashion has also been mirrored in the economy as a whole, with well-known skin and hair products reporting increased sales during the economic downturn and the beauty industry enjoying market growth. Beauty and fashion start-ups have the added benefit of low set-up costs and low entry barriers.


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2. Creative businesses

The second most popular sector taking out our loans is for people starting creative businesses. We have provided financial backing for everything from costume hire shops such as Fancy Dress Fanatics in Bristol to The Old School Club arts and craft centre in South West London.

The massive success of TV shows like the Great British Bake Off and Mastercrafts highlight, how as a nation, we are returning to more creative pastimes. Individual’s hobbies and interests often help provide inspiration for new ventures. People want to work in an area they are passionate about.

3. Business services start-ups

Business services come in third place. These are any type of venture that provides services to other organisations.  A budding entrepreneur will often have experience in this sector and spot a need or gap in the market leading to their light bulb moment.

Nick Powell and Harry Grubb were both officers in the British Military, serving seven years and 10 years respectively. On returning to civilian life, both were unsure what their next step on the career ladder should be and soon realised that this was a problem for many who have served in the armed forces.

They spent time looking at the skills and knowledge gained during a military career and realised the expeditionary nature of operations conducted by the military and those performed in the oil, gas and mining industries are very similar. They decided to set up Dettingen Resources, a recruitment company providing ex-military staff to these industries.

4. Cottage industry manufacturing start-ups

According to data from the Office for National Statistics, manufacturing in the UK grew by 1% in February this year, the biggest increase since September 2013. Growth in areas including transport equipment and food and beverage production have been attributed to this.

Over the last 12 months, Start Up Loans have lent to cottage industry businesses such as Utta Nutta Peanut Butter, which is produced at loan recipient Katie Sargent’s home, as well as larger scale manufacturing firms like Obsydian Bikes.

5. Technology start-ups

Completing our chart of top five sectors we have lent to is technology firms. This is no surprise, over the last three years this sector has mushroomed with the number of tech firms in the UK doubling, providing employment to half a million people.

The government has embraced growth in the tech industry supporting developments such as Tech City UK in East London, trying to ensure the UK is at the forefront of digital technology. Alex Foster and Ben Gamble are behind one such tech start-up.

They borrowed £15,000 to create Race Yourself, an exercise app to work with the soon to be launched Google Glass. Their product has already generated a massive buzz in the industry and has received extra investment from Silicon Valley.

There are now 4.7 million micro and small businesses in the UK, which brings in 18% of the UK turnover as well as employing 32% of the nation’s workforce. These figures prove just how important start-up businesses are for our economy.

Whatever the industry we need to keep encouraging and nurturing entrepreneurial spirit. Whether we are funding a mobile hairdresser or a high-tech smart phone app, start-up businesses can only be a good thing for the UK’s continued economic recovery, creating jobs and topping up the national coffers.

Yasmina Siadatan is the creative director of Start Up Loans, a restaurateur, and the winner ofThe Apprentice in 2009. Apply for a loan here

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