Businesses can finally access £92m of Osborne cash
Midlands companies can from now finally start to access £92m of funding that was originally announced by then-Chancellor George Osborne in his last Budget 23 months ago.
Sajid Javid MP, who is the ministerial lead for the Midlands Engine, is in Birmingham today to launch the equity finance funds that sit within the Midlands Engine Investment Fund (MEIF).
They will complement the £120m that was released last August in the debt finance and small business loans pots.
The British Business Bank, which is overseeing the MEIF, has faced a range of problems and complaints before the fund even launched. It had to run the equity finance tendering again after a botched procurement process resulted in legal action and a delay of a year in the money becoming available.
However it is now able to launch the equity funds, a major milestone for the MEIF.
“We believe there is a major opportunity to increase the supply of equity finance in the Midlands, and to enhance the growth ecosystem,” said Patrick Magee, Chief Commercial Officer, British Business Bank.
“The launch of the Midlands Engine Investment Fund’s equity finance will help to grow the region’s access to funds to support its economic potential and collective talent.”
The equity finance is being split between three fund managers. Midven and Foresight will received £34.5m each to operate a venture fund in the West and East Midlands respectively. Mercia Fund Managers will have £23m for its proof of concept and early stage equity fund that covers the whole of the Midlands.
The fund managers will have until the end of 2023 to distribute the money, with some scope for follow-on investments after that deadline. The investments across the three funding pots can range from £25,000 to £2m.
The £250m MEIF brings together new and existing funding from Government, the European Regional Development Fund, British Business Bank and European Investment Bank. The 10 Midlands Local Enterprise Partnerships (LEPs) have redirected £79m of their European funding from a 2014-2020 programme into the MEIF.
Pat Hanlon, chair of the Greater Birmingham and Solihull LEP’s (GBSLEP) access to finance group, said: “The launch of the Midlands Engine Investment Fund represents a significant opportunity for local businesses to access a share of £250m in financial support.
“Supporting the Fund is an important aspect of GBSLEP’s commitment to its business and innovation priorities – in particular, strengthening the region’s provision of business support and access to finance.”
More than 15% of the £250m MEIF is being held back so that it can be allocated to the best-performing fund managers.
The funding pots which were announced last summer sees Maven Capital operate the debt finance funds, with £50m for businesses in the West Midlands and £40m for those in the East Midlands. Businesses can apply for loans ranging from £100,000 to £1.5m.
The small business loans have been split between BCRS, which will have £17.5m to distribute in the West Midlands, and First Enterprise, with £12.5m for East Midlands businesses. Loans of between £25,000 and £150,000 will be available.
Four loans from the small business loans debt fund were announced before Christmas while Maven expects to close its first deal shortly.
