The creation of new funding streams and the continuance of existing ones was one of the most promising aspects of the PBR. Business owners looking for an injection of capital to consolidate, expand, diversify or re-structure should review the wide range of options now available.
Unsecured loans: The extension of the Enterprise Finance Guarantee Scheme (EFG) was welcome news to SMEs. Originally intended by the Department for Business Innovation and Skills as an emergency support package for viable companies needing unsecured funding of up to £1m, it was due to end in March 2010. For companies that are too large to rely on bank loans but too small to attract private investment, this scheme presents a lifeline and has been continued for a further 12 months, with an expected £500m additional funding behind it.
EU support for SMEs: Another fantastic piece of news was the extension of the European Investment Bank Fund (EIB), a scheme which aims to make long term finance available for sound projects which further EU objectives. The EIB’s priority is to support SMEs, and it is releasing £4bn of funding for UK business by the end of 2011.
Alternative to traditional funding: If bank funding simply isn’t available or isn’t appropriate to a company for any reason, the Growth Capital Fund may provide a solution. Aimed at SMEs, it uses investment bank finance to establish a fund, providing an alternative option for businesses needing an injection of cash.
Green incentives: Technology companies stand to benefit from the UK Innovation Investment Fund, a venture capital scheme which promises £125m for low carbon technology projects, and a further £200m investment in general technology. An existing investment vehicle that has been extended to reward low carbon projects is the Strategic Investment Fund, which will benefit from an additional £200m next year.
Training support: Skills for Growth will continue as the main source of funding for Train to Gain schemes at levels 2 and 3, plus apprenticeships will be encouraged as much as possible. This could be a cost effective way to inject new talent into your business, particularly as the economic recovery demands higher staffing levels which can be costly to fulfil.
Local investment: The good news is that local councils will be investing in projects requiring private sector contractors. Add to this the fact that the Government is working on decreasing their creditor days to 10 days for 90% of invoices and this is an extremely attractive proposition for SMEs. Make sure your business is in excellent shape to meet the demands of public sector tenders and proactively contact local authorities to find out what opportunities may be coming up.
Catch it while you can: Not all schemes are being continued however, so you should take advantage of them as soon as possible. For example, the Capital for Enterprise Fund was launched as a temporary measure to support viable but over-leveraged businesses by converting debt into equity. So far it’s made offers totalling £45m and it will close to new investments from March 2010.
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