European fund to help business lends £4m in Southwest
One of the difficulties faced by small and medium sized businesses in search of additional finance is knowing just where to look. There is already a bewildering range of potential sources of finance – both lending and investment – from both traditional and an increasingly broad band of alternative providers.
But there are also government funds specifically designated for use in the regional development of certain parts of the UK – if you know where to find them. Thanks to recent allocations of some £4 million, some businesses in the southwest of England might be considered the lucky ones.
Bank loans, equity investment and other financing solutions may provide more or less familiar sources for many small businesses.
Some business loans, for example, are considerably easier to come by than others. There are online lenders capable of receiving and processing applications within the same working day and getting the funding directly to the applicant company in just a matter of hours.
For more information about this type of borrowing, you might want to take a look at the “Business Loans Explained” guide by Everline. This type of business finance bypasses the need for lengthy form filling; meetings with your bank manager; and several weeks’ wait for a decision.
There are an estimated 5 million smaller businesses in the UK and they contribute almost a half of the private sector’s total economic output. Little wonder, therefore, that the government is doing all that it can to bolster the strength of this sector of enterprise, especially with respect to access to the funding that many small businesses require.
One area that seems notably absent from the present raft of government initiatives, however, is the funding that may be available to many small businesses in certain regions of the UK by way of grants.
One of the reasons for this apparent lack of information and promotion may be because the funds for such grants may be made at the European level, by national government or by local councils and development funds.
At the European level, for example, the former European Regional Growth Fund has since 2014 been replaced by the European Structural and Investment Funds (ESIF). Between 2014 and 2020, ESIF is planned to provide a total of €6.2 billion throughout England in projects that:
- support businesses;
- create jobs; or
- increase skills.
Where there may be a danger of the existence of such funding getting lost, however, is the fact that although the ESIF is managed at national level by the Department for Communities and Local Government, the funds are then allocated to a total of 39 different Local Enterprise Partnerships across the UK.
The UK government also manages a Regional Growth Fund valued at some £3.2 billion (for the period 2011 to 2017) that is also available to qualifying businesses, more than 3,500 of which have so far benefitted from access to such funds.
Qualification for regional growth funding depends on the business:
- being based in England;
- looking to grow or strength their business,
- wanting to protect or create new jobs;
- also using their own private capital;
- unable to secure funding from any other source; and
- in search of funding of less than £1 million.
Once again, however, businesses wanting to go about getting support from the Regional Growth Fund need to identify a local programme that may be run by the local council or other funding organisation in their area.
The £4 million in funding received by businesses in the southwest, for instance, was European funding managed at the local level by the non-profit South West Investment Group (SWIG). Since 1996, SWIG has channelled some £15 million of loans to more than 1,500 small and medium sized enterprises in the southwest of England.
SWIG is in turn a member of the Community Development Finance Association (CDFA) which exists to increase investment in and lending to local businesses throughout the UK. CDFA’s members make loans to sole traders, businesses and social enterprises that have been unable to secure funding from any of the high street banks.
CDFA, SWIG and other networks like them are thus responsible for facilitating the funding of local businesses through loans that might not otherwise be available to support community development projects.
The lesson for the small business searching for alternative forms of funding in their area, therefore, is to follow the trail from as far away as Europe, down through national government, to those local agencies responsible for the allocation and management of such funds.
BIO: Jean Jones lives in Oxford and teaches economics.