A £2 million fund which has helped hundreds of entrepreneurs get their businesses off the ground has become the latest victim of spending cuts.
The Arrow Fund, a not-for-profit lender backed by Advantage West Midlands (AWM) and Birmingham City Council, is closing against a backdrop of cutbacks in the public sector.
Working with Lloyds TSB, Arrow acted as a loan guarantee scheme and was designed to fill a gap in the lending market, offering loans of between £1,000 to £10,000 to help people go self-employed or expand their small business.
With the Government gambling on the private sector to offset the job losses set to be caused by the spending review, there are fears the disappearance of schemes like Arrow could undermine a business-led recovery.
Federation of Small Businesses West Midland policy manager Denise Craig said many of the organisation’s current members had started out after being made redundant in previous recessions.
She raised concerns over what Arrow’s closure could mean for would-be entrepreneurs in Birmingham.
“There is likely to be several people who find themselves out of work who may consider starting their own business,” she said. “If there is no access to lending for these new fledgling business they might not actually get off the ground.
‘‘It is a concern that yet another route to that sort of lending has ceased.”
She said it was increasingly difficult for small businesses – particularly start-ups – to access small loans from banks.
“If small businesses are to drive the economic recovery, they need to be given the tools and resources by which to do this,” she said.
“Access to finance is a crucial element of that tool box. It’s very difficult for newly-started businesses to access finance.
“They don’t have trading accounts by which their application can be judged and in these cautious times banks are increasingly applying stricter criteria.”
The Arrow Fund helped small firms which had been refused a bank loan or an overdraft, offering unsecured loans to businesses ranging from a tyre and puncture repair shop to hairdressers and pizza restaurants.
Arrow Fund chief executive Alison Bradley said: “The Arrow Fund has come to the end of a very successful period of operation.
“Run on a not-for-profit basis with business formation and employment opportunities at the forefront of our aims, we are immensely proud of our achievements over the last 15 years.
“Our partners and funders Lloyds TSB, AWM, Birmingham City Council and the Chamber of Commerce have provided support to enable us to assist more than 300 small businesses with just over £2 million of lending and the staff at Arrow have worked hard to ensure that those that were finding it difficult to raise finance to start or develop a business had the opportunity to do so.
“In the future, I personally will continue to utilise my knowledge and expertise to support individuals and businesses to raise finance to start-up and develop their businesses.”