By Marcus Leach

Whilst a large proportion of the business community has welcomed the expansion of the government's start-up loans scheme, not everyone feels it is good news.

Rajesh Agrawal, CEO & Founder of RationalFX believes that despite the lending pot being increased from £82 million to £112 million, it would be far easier to fund your business with a credit card, as he did himself.

"I welcome any help given to budding entrepreneurs, but it seems to me that the Government is collecting lot of brownie points with doing too little," he said.

"With the internet, the opportunities of setting up a business with small capital is huge — however with the average loan of £2500 given by start-up loan scheme, which is just over a month’s average London salary, it can only go so far.

"Rather than going through the cumbersome process of getting the loan with little success rate (apparently out of 3000 application only 460 got approved), it would be easier to fund it with credit cards! In fact that is exactly what I did when I started my business in 2005."

Agrawal said that the government should be looking at alternative methods for finance, such as equity backed schemes.

"In my opinion government should consider equity backed schemes and co invest with approved business angels/third party investors," he went on.

"Having independent third party investors means that they will assess, monitor and exit the business more effectively. It is also a major encouragement to the entrepreneurs as the investors will help the business succeed, as opposed to leaving the entrepreneurs alone to repay the loan in the startup loan scheme. In Singapore, in a similar scheme, the government would fund up to $1.5m in start up businesses."

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