The long awaited Business Growth Fund (BGF) a £2.5 billion investment fund for business, has now been launched by Business Secretary Vince Cable. The scheme which is funded by a number of leading British banks aims to help those small and medium sized businesses which have previously struggled to secure financing to support their growth plans.
Building upon the outcomes of the “Project Merlin” deal which encourages banks to lend more, the fund targets those companies with sales of between £10 million up to £100 million per annum. For these companies, the BGF will look to invest long-term capital of around £2 million – £10 million per business, in return for an equity stake of at least 10 per cent and a seat on the board.
Commenting on the launch of the fund, Ian Larrard, director of the initiative in Swindon and Wiltshire, GWE, said: “The economic climate of the past few years, has meant accessibility to finance has become a growing and persistent issue for business. The roll out of the Business Growth Fund is therefore a welcome development, and a constructive step towards improving relations between the banking sector and business.
"It is important however, that a balance is struck between targeting established, low risk companies and engaging the wider small and medium sized enterprise (SME) market. Quite simply for the majority of SMEs, the banks’ offer to make equity stake investments will not appeal.”
