Banks to distribute Regional Growth Fund to SMEs

SMALL and medium-sized enterprises will be able to gain access to the £1.5bn regional growth fund through a series of smaller £1m pots which will be controlled by the big four high street clearing banks.

Speaking at a Downtown Liverpool in Business event ahead of today’s £1.6bn Regional Growth Fund launch in Liverpool, Lord Heseltine said: “I’ve had conversations with the four major clearing banks and in principle we’ve agreed that they would seek to make bids to my department for £1m which will be an aggregation of small bids.”

The fund has been launched to help support the English regions which will be most impact by the coalition government’s austerity measures. Lord Heseltine said that the fund would accept bids from private companies, public-private partnerships and venture capital fund managers. However, bids need to be for a minimum of £1m.

“I know from my own experience that in less privileged areas the most likely dynamic will be from SMEs, but if you have a ceiling of £1m you’re only talking about a handful of companies that could apply,” said Lord Heseltine.

Lord Heseltine said that the idea for creating the £1m pots with the clearing banks would allow it to use the banks’ branch managers and infrastructure to distribute smaller packages of funding to SMEs.

“The object is to create jobs but there is no prescription as to what type of jobs would be created,” he said. “They can be high-tech or low tech.

Lord Heseltine said that the fund would not accept bids that were purely submitted by public sector organisations. Other than that, however, he argued that there would be few restrictions on the type of bids that will be accepted.

“I do get asked what sort of bids we want, but that’s to miss the point.

“It’s up to you to decide the type of bids we receive. And it’s a competitive process.

“Come and tell me what you’re going to do if my fund contributes some money to help you. Of course, I will perhaps look to see how much you’ll help yourselves along the way.

He said that this wasn’t to stop ventures from making a profit, adding: “If you think you’re ideas are so good I might be reasonably asked to expect you to put a bit of money in.”