Greg Clark, the business and energy secretary, said Start Up Loans, funded by the government through the British Business Bank, generates a return on investment to the economy of £3 for every £1 spent.
The loans have helped start-up businesses to get their business up and running with finance and support. According to Clark, there were 5.4 million SMEs in the UK at the start of this year, creating more than 15 million jobs and contributing £1.8trn to the UK economy.
Moreover, half of the loans to people aged between 18 and 24 go to those previously unemployed or not in education or training, while one in five go to deprived areas of the country.
Clark said that “everyone should have the chance to turn a great business idea into a reality” as entrepreneurs and small businesses are “the backbone” of the economy.
A report from EY and Statista in Germany found that London has overtaken Berlin as the start-up capital of Europe this year.
The report said that London start-ups received an investment of €1.3bn (£1.1bn) in the first half of the year, ahead of Stockholm with €1bn and Berlin with €0.52bn.
Last year, Berlin was the European city leading the group, followed by London, Stockholm and Paris.
Tim Sawyer, Start Up Loans’ chief executive, said, “SMEs drive our economy, and the role start-ups play in this shouldn’t be over-looked.
“Seeing such a great demand for finance from Britain’s would-be micro-business owners is a great indication of the appetite for growth in this sector.”
Sawyer expects 2016 to be a busy year for microbusinesses. Start Up Loans offer fixed rate loans of up to £25,000 and provide access to business support for those starting their business for the first time.