Spending chiefs have urged the creation of a new £200m fund aimed at North East SMEs seeking finance for growth.
The cash call is the key recommendation of a new report – Strategic Overview and Recommendations – published by North East Access to Finance (NEA2F), which sets out a strategy for access to finance in the region, including proposals to ensure its continuation when the Finance for Business North East (FFBNE) fund runs its course.
The North East has benefited from a series of publicly-backed investment funds including the FFBNE, which will continue to invest in the region’s SMEs until the end of 2014, but NEA2F said there is a clear need to continue this funding stream, prompting them to commission EKOS Limited, an economic and social research consultancy, to carry out research into the impact of public sector investment funds in the region.
The results of the survey form a strategy for SMEs’ access to finance over the coming decade, which reveals the LEPs – the North East Local Enterprise Partnership and Tees Valley Unlimited – NEA2F and other stakeholders are exploring options with potential funders should a full replacement for FFBNE not be available by the start of 2015.
NEA2F have recommended the creation of a £200m regional ‘Fund of Funds’, covering the two LEP areas incorporating four or five sub-funds of £25m to £50m each together with a smaller micro-loan fund, with the fund objectives being designed to align with the strategic priorities of the two LEPs.
NEA2F chairman Geoff Hodgson said: “This document sets out a clear strategic direction which, we believe, is relevant not only for North East England, but at a national level.
“North East England has led the way for many years in the development of investment funds of this kind and continues to be at the forefront of thinking.
“We see this research and our strategic recommendations as contributing to the continuing evolution of access to finance provision for SMEs.”
The objectives of the fund will be specifically designed to align with the strategic priorities of the two LEPs.
North East LEP director Edward Twiddy said: “Now we have an authoritative analysis of what did and did not work, and what SMEs want from investment funds, we have a good road map going forward. We will use these recommendations as part of our strategy for the region’s economic growth.”
Stephen Catchpole, managing director of Tees Valley Unlimited, added: “We welcome these findings and the new insight they provide into SME investment in the region and, importantly, what businesses require from investment funding.”