Mixed response to Growth Fund launch

THE launch of the £2.5bn Business Growth Fund has been met with a mixed response.

The fund – launched by the major lenders – allows banks to take stakes of between 10% and 50% in high growth businesses with turnovers of between £10m and £100m in return for investments of £2m to £10m

Jonathan Hurst, chairman of business advisers KPMG in the North, believes it will be a major stimulus for a number of  the region’s entrepreneurs. 

“This represents a positive move for the UK’s fast growing and entrepreneurial businesses, and provides a good level of certainty to realise growth ambitions.

“SMEs remain the backbone of the UK economy and this injection of funding will encourage this sector to move forward with well-thought-out growth strategies that will undoubtedly assist in the nation’s recovery.”

But small business pressure group the Forum of Private Business was less positive and fears the fund won’t help many small firms.

Citing the latest figures from BIS, the Forum says just 5% of SMEs have funding requirements of £1m or more – with just under a quarter (23%) needing between £10,000 and £24,000.

The Forum says that just 1% of SMEs are seeking equity finance, with the majority preferring debt lending in the form of bank loans (40%) and overdrafts (35%).

Senior policy adviser Alex Jackman said: ““The Business Growth Fund aims to bridge the clear gap in funding for ‘high growth’ firms identified in the Rowlands Review back in 2009 and so is certainly a welcome step and one that is long overdue.

“But we cannot allow this to overshadow the real problem – the lack of affordable lending being made available by banks to start-ups and other small businesses – those that are not eligible to benefit from the fund. There is a real danger that these firms will be left behind and that would be disastrous for the economy.”