Momentum continues to build behind the Start-up Loan scheme for young entrepreneurs with the new phase of growth underlining the role of the alternative finance sector and the value of products such as invoice finance.

2013 has started well for the government’s Start-up Loan scheme: the business lending initiative received a £30 million boost in January before reaching a major lending milestone in February. On the back of this success, the government has pledged a further £5.5 million in funding for the scheme, which has been extended to people under the age of 30 (it was previously open to those aged between 18 and 24).

The continued expansion of the Start-up Loan scheme emphasises the importance of the alternative finance sector to small businesses – in recent years schemes such as this one and products like invoice finance and factoring have played a major role in providing start-up funding and maintaining cash flow as traditional lenders have maintained cautious attitudes to SME finance.

New figures from the Finance & Leasing Association underline the consistent growth of the alternative finance sector. According to the association, core asset finance new business grew by 5% in January 2013 compared with the same period in 2012. Overall, IT equipment finance and car finance were key growth areas.

The second injection of extra cash into the Start-up Loan scheme in less than three months comes at an interesting time. With the 2013 Budget due next week, all eyes will be on measures to improve SME lending, and recent developments suggest that alternative finance may play a key role.

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