By Marcus Leach
Hundreds of small businesses will benefit from government investment of £95 million to help boost growth and rebalance the economy, Prime Minister David Cameron announced today (Thursday).
The funding is expected to create at least 4,000 jobs and unlock around £500 million of new investment by small and medium businesses (SMEs).
RBS, NatWest and HSBC have agreed to facilitate the distribution of the £95 million - which is part of the government’s Regional Growth Fund. RBS and NatWest will facilitate £70 million and HSBC will facilitate £25 million. The banks will not profit financially from the administration of these schemes.
Through these schemes small businesses, which are unable to secure commercial funding for their project, have the potential to benefit from government support through the banks’ regional networks in order to make their project commercially viable. The schemes announced today will provide grants to support SMEs considering investing in new capital assets and creating new employment.
“These schemes will directly help SMEs that want to invest and create new jobs. They will deliver a shot in the arm to local communities and help small businesses drive local growth," Business Minister Mark Prisk said.
“100 per cent of the RGF funding will be provided as grants to small businesses with the banks employing their regional networks to administer the schemes for free.”
The key features of the RBS, NatWest and HSBC schemes are:
- The RBS and NatWest scheme is called the regional growth fund and will distribute £70 million; the HSBC scheme is called the Assisted Asset Purchase Scheme and will distribute £25 million.
- The funding will support new job-creating investment by SMEs across England, in particular parts that have become over-dependent on the public sector.
- 100 per cent of the RGF funding will be provided as grants to SMEs with the banks employing their regional networks to administer the schemes on a pro-bono basis.
- SMEs can qualify for a grant if they are going to invest in new capital assets, such as plant and machinery, and create new jobs — and cannot get normal bank finance.
- Grants of up to £500,000 will be awarded alongside the award of a new bank loan on commercial terms.
- To qualify for the NatWest and RBS scheme, SMEs need a turnover of less than £25 million.
- To qualify for the HSBC scheme the SME will need a turnover of less than 50 million Euros.
- The banks will not earn any fees to administer the scheme. Interest earned on any funds held on the bank’s balance sheet must be used for beneficiary grants or returned to the government.
The government’s Regional Growth Fund is a £1.4 billion fund supporting projects that can create jobs, are based in areas dependent on the public sector and are supported by private sector investment.
The fund has been primarily targeted at larger firms, with a minimum grant threshold of £1 million.
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