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Can regional funds help my business?

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In recent years, regional funds have become a crucial part of the North West business finance sector.

These funds, such as the North West Fund and the Greater Manchester Investment Fund, are backed by public money but allow local decision-makers to deliver fast and flexible funding. As such, they enable businesses to obtain growth finance they wouldn’t be able to access from traditional private sector lenders.

In this Q&A guide, our corporate team explains the growing influence of regional funds and how businesses can benefit from them.

Why do businesses need publicly-backed funding?

Regional backed funding can fill a gap left by mainstream lending and traditional venture capital and private equity. In particular for growing businesses, they may not have a suitable risk profile for the high street, whereas publically-backed funds – particularly those which operate in specific sectors – can offer an alternative option for growth capital which can give businesses a boost to the next level of their development. If business owners are ambitious enough, and prepared to back their businesses, then publically-backed funds can provide the impetus required to give their dreams a chance of succeeding

Why are regional funds important?

Regional funds allow decisions to be taken at a more local level. The fund operators will have a much stronger grasp of relevant, local issues which might affect the applicant business, and will be aware of opportunities and threats which more national lenders might otherwise miss or disregard. This key local insight allows regional funds to make more ambitious funding decisions, bringing additional options to the table for businesses looking for finance. Keeping the lending local also helps generate a local sense of togetherness and regional identity, which can bolster the general business mood in a region much more than general pronouncements from The City about the state of lending in the country.

Are they effective in enabling the region’s business base to grow and develop?

I think it’s clear to see that through some of the investments which the local funds have made, businesses have been given the opportunity to grow and thrive in what have been trying circumstances for many. While the price of the money and level of security might sometimes seem daunting to the uninitiated, given the additional levels of security now being demanded from the high street, the potential down sides to regional public funding are reducing in comparison. As a result, many businesses have had the opportunity to develop much more quickly than they otherwise might have, giving a noticeable boost to the economic life of the region.

Are there any issues with a lack of quality businesses to attract investment?

The funds will always tell you that they have more money to get out of the door, and the assessment criteria and application process can be challenging. However, there are plenty of businesses appearing with great ideas. As an example, the North West Fund for Micro Loans recently announced that its put out over £1m in funding, based on maximum loans of £50,000, and all that in under a year. That shows that there are good businesses out there with investment potential and a desire to grow and succeed. However the National Audit Office statistics cannot be ignored, and their reports last year that “significant” amounts of money in regional growth funds remained unspent suggests that there was a blockage at some point in the lending pipeline. Hopefully, some of the steps that the last government took to smooth this process will begin to show fruit under the new government, which has already made noises about bringing a more decentralised approach to economic growth.

What is the outlook for regional funding investment?

Regional funding investment is clearly still very much on the agenda. One of the new government’s stated prime aims is boosting the country’s local economies, and public regional funding schemes are a key plank of how this will be achieved. As more businesses become aware of the different sources of funding which are available to them, regional funds should find themselves with more opportunities to get money out of the door directly into the local economy to provide growth and jobs directly into those areas. However, with some of the funds being backed by European money, it will be interesting to see how the debate over Britain’s future within the European Union impacts on these funds, and their continued ability to lend.

 To speak to contact out Corporate team, please call 01772 258321.


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