It's a timeless question: how do you fund a start-up when you have no capital? But for entrepreneurs in the U.K. funding has become especially harder to find since the credit crisis.
Despite government initiatives like Project Merlin, where tax-payer cash was pumped into major U.K. banks to lend to small businesses, the number of entrepreneurs securing a bank loan has fallen by 25 percent from the pre-recession high point.
One U.K. minister thinks he may now have the answer to the problem – let the government take on the risk.
In a bid to steer the battered U.K. economy through the economic storm, U.K. Business Secretary Vince Cable is promoting his taxpayer funded "business bank," which aims to supply entrepreneurs with 10 billion pounds ($16 billion) of loans.
Despite some support for the idea from the small and medium-sized enterprise (SME) sector, experts worry that by the time the bank is set up, it will be too late to provide any real help to British entrepreneurs.
"My one concern about the business bank is how long it will take to put in place," former banker Peter Black told CNBC.
"I think the business bank is a good idea but things could be done much quicker. There are some good ideas going on but it is getting them to the market faster because that does not help anyone now."
The U.K. government is expecting the SME sector to play a key role in the turnaround of the economy.
Up until this Autumn, that had involved Quantitative Easing and Project Merlin, neither of which had persuaded banks to lend with the same confidence they had during the boom years.
"You can't change short termism overnight," said Black, a former senior partner at Yorkshire Bank. "Models develop and I think the finance model is definitely going through this change. "
However, Black warned larger banks were missing out by not backing bright entrepreneurs and risked their own future in the process.
"We will see banks more as a transactional partner, not somewhere entrepreneurs would get advice and help from."
Six years ago, 90 percent of British businesses who approached banks for funding had their loans approved, according to the Office of National Statistics (ONS). By 2011 that number had dropped to 65 percent.
The banks argued this drop reflect a fall in demand for loans thanks to the recession. However, the same ONS report claimed demand for business loans had risen after the 2008 crash.
The business bank, it is hoped, will fill this gap after it kicked off its first round of funding at the beginning of October.
Thirty million pounds ($48 million) of government funding has been matched by another 30 million pounds from the Co-operative Bank and Unity Trust Bank.
Government support will be in the form of both guarantees and equity, and will go on to the balance sheet of the new institution and not be reclaimed by the Treasury.
"The role of government is to help people to start," said Lord Young, Enterprise Advisor to the U.K. Prime Minister David Cameron.
Private sector funders have moved away from start-up funding "because this is high-risk business," said Lord Young, himself a former entrepreneur.
"People who have no track record, have never walked in a bank and (the) bank won't give it to them, because why should they? This is the government's responsibility."
He was speaking about his endeavor to encourage entrepreneurship, an 82.5 million pound ($132 million) government and private sector fund to provide start-up loans for 18-24-year-olds.
Lord Young said his scheme was similar to one run by British youth charity, The Prince's Trust. The U.K. government will provide a £2,500 loan and a mentor for entrepreneurs.
Lord Young who served under British Prime Minister Margaret Thatcher, said he was hoping to get the start-up loans repaid in a similar manner to student loans once an entrepreneurs earn 14,000 pounds ($22,400).
One young entrepreneur who benefited from the Prince's Trust scheme is 29-year-old Scott Adams from the north of England.
Three years ago, Adams was unemployed despite working a number of short-term jobs.
"It was really difficult to find a permanent job. I did work experience, voluntary work, and short-term contracts. However by 2009, when the recession started, even those opportunities were really hard to come by."
Adams, a zookeeper, wanted to start an "education center" in Telford after seeing the success special needs pupils had when they were visited the mobile zoo.
"The banks did not seem very hopeful, especially for small businesses," Adams said. Looking for a solution, he took part in the Enterprise Program run by the Prince's Trust charity and used the funding to expand his mobile zoo into an "indoor rainforest" for his exotic menagerie.
"I have kept a lot of animals and worked with a lot of animals throughout my life, but not in a paid way," the 29-year-old told CNBC, when explaining the idea behind his business.