Huddersfield’s Business Lending Partnership will see the institution lending an initial £100,000 via Funding Circle, a website which allows investors to lend directly to small businesses.
The university hopes to earn enough interest from the loans over the next five years to offer 200 scholarships to students from socially deprived backgrounds enrolled on its BA in enterprise development.
It also aims to arrange a programme of seminars and student internships with companies that borrow through the scheme.
The scheme is the brainchild of Huddersfield’s vice-chancellor, Bob Cryan. He said his university prided itself on its business degrees and graduates.
“The Business Lending Partnership will help us to strengthen our ties with businesses across the UK, which can only benefit our students,” he said.
“[It] represents the University of Huddersfield’s commitment to the future of British business. Together we will support entrepreneurs active in today’s business world while helping young business people develop the right knowledge and skills for the future.”
Retail magnate and Dragons’ Den regular Theo Paphitis described the scheme as “an exemplar for other universities to follow”.
The scheme is only the third institutional partnership involving Funding Circle, following the recent establishment of similar arrangements with the UK government and Lancashire County Council.