Gov-backed bank data shows 132% increase in Gen-Z starting their own businesses amidst tough job market
New data released by Start Up Loans, part of the British Business Bank, reveals there has been a surge in entrepreneurship amongst Gen Z, with the number of loans taken out by young founders increasing by 132% over the last five years, as more young people look to start their own businesses.
In the last five years, Gen Z founders have secured more than £80m in funding, with the number of loans taken out by young entrepreneurs rising year-on-year from 830 in 2020 to 1,929 in 2025. The annual value of these loans has nearly tripled, rising from £7.2m in 2020 to £21.2m in 2025.
Despite ongoing market challenges, Gen Z has remained resilient. In 2025 alone, over £20m in finance was accessed by Gen Z founders, as over 1,900 young founders looked to start their own business in the last 12 months.
Research published late last year by KPMG found Gen Z workers are increasingly leaving corporate careers in pursuit of entrepreneurial opportunities, with 42% leaving to work in start-ups and 35% going freelance or becoming self-employed. Younger Gen Zs entering the workforce face a tough job market, with ISE data showing a record 140 applications per graduate vacancy, the highest level in over 30 years.
Data from Start Up Loans suggests that against this backdrop Gen Z are turning to starting their own business. Five years ago, Gen Z founders received 7.7% of the programme’s loans; by 2025 this had risen to 17%, making them the only generation to increase their share over the period.
In the same timeframe, the proportion of loans taken out by millennial founders remained steady wavering around the 57% mark, whereas loans to Gen X dropped from 28.6% to 23.0% and Baby Boomers fell from 6.0% to 2.4%.
Blair McDougall, minister for Small Business and Economic Transformation, said: “Age shouldn’t be a limit on entrepreneurial ambition. It’s fantastic to see an uptake in aspiring young people taking advantage of government support to help turn their ideas into thriving businesses.”
One young founder that has used funding from the Start Up Loans programme is 25-year-old Louis Watkins, founder of Clear for Men. In 2021 he launched the brand to empower men to feel confident, while normalising conversations around mental health.
Louis Watkins, founder of Clear for Men, said: “I started Clear For Men in 2021 after struggling with my mental health. I felt lonely, burnt out, and lost a lot of confidence. Skincare reminded me to pause, take a moment, and prioritise myself. I wanted to build a brand that helped men feel more confident in their skin, whilst encouraging conversations around mental health. I wanted to become somewhat of a role model for men, and I believe that by sharing my journey every day, I’m helping people see they’re not alone. Clear For Men is so much more than skincare – we’re breaking the stigma around male mental health, one bottle at a time.”
“The funding from Start Up Loans helped me take this from an idea into a real business. Since then, the business has grown and we now partner with independent stockists like The Station in Bridgend, as well as selling online and on social media. I am looking to expand into new retailers like hotels and spas, whilst also working on sustainable packaging innovations and future product launches, including an SPF moisturiser.”
Louise McCoy, managing director of Start Up Loans Products, British Business Bank commented: “The younger generation is extremely entrepreneurial in nature and shouldn’t be underestimated. A key challenge young people will face though is affordable access to finance and impartial support given their lower savings and lack of track record. Start Up Loans exists to fill these market gaps and we are proud of the work we have done to help younger people start businesses.
“We can see from businesses like Louis’ that they are a particularly purpose driven generation. They are looking towards starting their own businesses as an alternative to traditional career paths, but also looking to start ventures that have a positive impact on the world they live in. We are committed to ensuring founders of all ages have the capital they need to start a business, because we believe every strong idea deserves the backing to succeed.”
Since its inception in 2012, the Start Up Loans programme has delivered more than 125,000 loans to business owners across the UK, amounting to more than £1.25bn of funding. The government’s Backing Your Business Plan announced in Summer that the Start Up Loans programme has been expanded and will provide more than £1bn of additional lending to entrepreneurs.