David Cameron has announced the Government has cut a deal with banks which will see them distribute £95 million to small and medium-sized businesses.
Lord Heseltine, the former Deputy Prime Minister, negotiated the arrangements with banks HSBC, Royal Bank of Scotland and Nat West, who will distribute small grants of up to £500,000 each on a pro bono basis.
The cash will come from the Government’s Regional Growth Fund, which is worth £1.4 billion in total.
The Birmingham Post is also distributing £5 million from the same fund to support businesses in Coventry, Birmingham and Solihull, after it won Government support for proposals to support the West Midlands economy.
But the new scheme, distributing £95 million across the country, has some important differences.
The aim of the scheme announced by Mr Cameron is to help businesses create or safeguard jobs by investing in capital assets such as plants or machinery.
Cash will only be available to buy assets and only as part of a package, which includes a loan from the bank concerned.
However, the aim is to make it possible for banks to offer loans they would otherwise be reluctant to provide.
The funding is expected to create at least 4,000 jobs and unlock around £500 million of new investment by small and medium-sized enterprises.
Mr Cameron said: “I’ve lost count of the number of times people working in our small businesses have told me they just can’t get a loan for that new investment, that new clean room or that extension to their business.
“We also need to be supporting the person who wants to start that small internet trading firm from their home.
“The plumber who sees the chance to start a business fitting green energy to people’s homes.
“The people out there who are brave enough to make a break and go for it.
“Often it’s a small investment – maybe just £30,000 – that can get those businesses going, create the jobs, kickstart the innovation and exports that we need.
“But these are the very loans that you simply can’t get without personal guarantees, like putting up your house – and even then the banks might say no.
“That’s got to change – and we’re going to use the Regional Growth Fund to help change it.”
He added: “By using high street banks like this we will give support to those SMEs that can’t access commercial funding and we will help areas of our country that other forms of business lending can’t reach.”