Treasury to offer equity to growth businesses
Article Date: Jan 14 2009The government is to make £75 million of equity finance available to businesses with growth potential in need of long-term capital.
Two-thirds of the Capital for Enterprise Fund will come from the taxpayer, with the balance from Barclays, HSBC, Lloyds TSB and Royal Bank of Scotland. The money will be used to provide equity and quasi-equity investments of between £250,000 and £2 million to companies with sales of up to €50 million (£45 million).
Mary Monfries, head of entrepreneurship at business advisory firm PricewaterhouseCoopers, comments, 'At first blush a £75 million fund looks fairly small.
'This is targeted at "viable companies which have high levels of existing debt". Where does that leave those who haven't got high existing debt but still can't raise the capital they need?'
The funding is part of a package of measures intending to help businesses struggling to raise finance.
A further £10 billion has been set aside to provide 50 per cent guarantees on business loans to companies with sales of up to £500 million, while another initiative, open to small businesses only, offers 75 per cent guarantees on bank loans from a fund of £1.3 billion.
John Wright, national chairman of the Federation of Small Businesses, says, ‘The onus is now on bank branch managers to actively promote this money to its small business customers to ensure their survival and the revival of the economy.
‘The banks now have no excuses.’
