Pioneering chamber SME fund could be rolled-out

A NEW multi-million fund launched by Greater Manchester Chamber to help the thousands of small businesses which “fall between the cracks” and fail to get bank funding, could be expanded into other areas if it is a success.

The Business Finance Solutions Fund, which already has £4m available to lend to  small and medium-sized businesses in Greater Manchester and Cheshire, was launched yesterday in Manchester by Stephen Hester chief executive of Royal Bank of Scotland and Greater Manchester Chamber of Commerce.

The fund – which is set to receive a healthy share slice of the Community and Development Finance Association’s £30m allocation from the Regional Growth Fund – and is also in line to receive nearly £2m from the European Regional Development Fund – will also bid for programme funding in the second round of the RGF, worth £1bn, Chamber board member Keith Johnston said.

Royal Bank of Scotland, which is the country’s leading lender to SMEs, while not contributing to the fund directly, will use its branch network to
promote the scheme and also second a number of staff to the fund manager.

Mr Hester said there was no reason why the scheme – if it was a success – could not be expanded.

“I think it is a good idea as a clear lesson coming out of the financial crisis is that banks need to be closer to customers.”

He said despite much criticism since the financial crisis about banks not lending, there have always been cases where some small companies were not seen as ‘bankable’.

He acknowledged though that among the 15% of the loan requests that RBS does turn down, there were some viable businesses.

“It is only hindsight that knows whether you have got it right or not so it is healthy for all of us to have another set of eyes and ears to know if businesses are viable or not,” Mr Hester told the launch.

RBS lent £30bn of the £66bn advanced last year to small- and medium-sized enterprises, he said.

Ron Mason, chair of the Chambers not-for-profit BFS fund – a former RBS banker himself – said the fund provides unsecured loans of between £3,000-£50,000 for up to five years to companies with turnover of less than €50m (£44m).

So far it has has lent £5.6m to more than 330 businesses since it was founded in 2003, safeguarding or creating 1,500 jobs, he said.