By Marcus Leach

The government's start-up loan scheme, aimed at offering young entrepreneurs loans to start their businesses, is to be expanded.

Originally aimed at 18-to-24-year-olds, the scheme, which offers loans of up to £2,500, is now being expanded to those aged up to 30.

Due to the changes being implemented the funds available have been increased from £82 million to £112 million, despite the scheme having only lent £1.5 million so far.

The Start-up Loans Company, which runs the scheme, said the relatively slow start was due to the time taken to set up local partnerships, but that the pace of loans had picked up during December.

The target is to lend all £112m by April 2015.

The expansion is due to be officially announced by Prime Minister David Cameron at an event later on Thursday.

"Start-up loans are an important part of my mission to back aspiration, and all those young people who want to work hard and get on in life, so this country competes and thrives in the global race," he said.

"They are a great way to help this next generation of entrepreneurs get the financial help - and the confidence - to turn that spark of an idea into a growing, thriving business."

However, Labour's shadow business secretary, Chuka Umunna, has criticised the way the scheme is being delivered.

"With our economy flat-lining it's essential that initiatives like the Start-up Loans scheme are delivered effectively if they are to provide real opportunities for our young entrepreneurs," she said.

"That's why it was disappointing that figures released at the end of last year suggested delivery of this scheme, like so many others from this government, was not living up to David Cameron's rhetoric."

Mark Pearson, serial entrepreneur and founder of MyVoucherCodes.co.uk, said that the expansion of the scheme exposed a degree of desperation from the government.

“The expansion of the start-up loans scheme is, in theory, great news for entrepreneurs and start-up businesses; but it does look as though it has only been expanded to those aged up to 30 because the scheme as it stood was not working," he said.

"I personally invest and work alongside a huge number of entrepreneurs and it is clear that many don't have an idea how or where to apply for the loan and also don't receive any advice or guidance on what to do with the money once they have it. What started out as looking like a brilliant government initiative now appears to be failing fast and the expansion smacks a little of desperation.”

Join us on
Follow @freshbusiness