The scheme has also been expanded to those aged up to 30 (from 24). To cater for the wider age band, the funding available for start-up loans will rise from £82m to £112m. Prime minister David Cameron called the scheme "vital for the future of our country", while entrepreneur James Cann, who chairs the Start-up Loans Company, said he believes it can help create 50,000 jobs over the next three years.
Ann Pickering (pictured), O2 HR director, welcomed the news. She told HR magazine that the scheme will "help give more young people opportunities to take their first steps into work", but warned more still needs to be done "harness" the skills needed in the workplace.
Pickering said: "Young people have been hit hard over the past 12 months with around one million struggling to find employment.
"While 2013 is likely to continue to present a challenging economic climate, the news that more money will be available for young entrepreneurs is a positive step towards helping young people unlock their potential.
"However, while innovative Government-led schemes that create pathways into entrepreneurialism and employment for young people are welcome, it's imperative that Government and business work together to provide a range of ways to support young people."
She added: "One avenue out of unemployment for young people isn't enough, businesses large and small can also give young people opportunities to help them take their first steps in the world of work.
"Their native digital skills are the future fuel of the economy but as it stands, there's just not enough being done to harness these skills. Whether offering support to create a new business, offering new jobs, funding, training, work experience or even mentoring - every opportunity counts and every business large or small can play a part."
Mark Beatson, chief economist at the CIPD, told HR magazine that while the loans are a "useful step'", they are "by no means the answer" to the UK's youth unemployment levels.
Beatson said: "Expanding loans to include a wider-age gap is a useful step but the problem lies in the younger generation who have never had a job, so this scheme may not be targeting the right people."
Recruitment and Employment Confederation (REC), director of policy Tom Hadley, told HR magazine: "Although the start-up scheme may not be the first step into work for many young people it is important to continue raising it as an option.
"The start-up loan scheme could offer young people a chance to get into work by starting their own business, but it must be made easy for young people to access if it is going to benefit them."
