Small business owners unimpressed by new Business Growth Fund
Over half of small firms say it will have “little or no impact” to overall bank lending
Small business bosses believe that the Business Growth Fund (BGF), due to be launched today by government, will do little to help them access funding.
That’s the conclusion of the new survey of over 1,000 small business owners, in which 62% of respondents said the fund will have little to no impact on overall bank lending to business.
Established as part of the Project Merlin agreement in February he BGF is aimed at helping growing businesses with a turnover of between £10m to £100m; the fund’s managers will invest between £2m and £10m per business, in return for a minimum equity stake of 10%.
Despite widespread publicity, the scheme has attracted controversy, with a number of influential businesses commentators criticising the scheme.
Brendan Flattery, chief executive of business software provider Sage UK, which commissioned the survey, said that “whilst initiatives like the Business Growth Fund are at least a step in the right direction, the criteria set for application to the fund means that relatively few businesses can actually benefit.
“Opening up funds to established businesses with a turnover of £10m or more is hardly a step-change to the status quo, where banks remain highly conservative, and risk averse in their lending.”
Ted Winterton, regional managing director of Bibby Financial Services told Growing Business that the fund “doesn’t benefit small and medium sized firms with turnovers less than £10m, or take away a huge target market for businesses which are currently finding the availability of equity difficult.”
Meanwhile, James Meekings, co-founder of Funding Circle, an online small business loan company, said that while he welcomed any effort to increase funding to small firms that the fund overlooks the smallest businesses and that “offering funding in exchange for equity in the business – at least 10% – is something small businesses don’t want to offer.”