Investment fund '˜will be more inclined to loan to businesses' than the banks

Keith Morgan, chief executive of British Business Bank, insisted the NPIF managers would carry out “strong, commercially-minded assessments” to make sure companies are able to repay their loans.

But he told The Yorkshire Post yesterday: “We are able to operate with a slightly wider risk appetite than high street banks.”

The fund, which was launched last month, is a new source of regional economic development finance to boost the local economy and help small businesses to grow.

It was set up by British Business Bank in conjunction with the Leeds City Region Enterprise Partnership and nine other LEPs across the North West, Yorkshire and Humber and Tees Valley.

Financed by the European Regional Development Fund, the European Investment Bank and the UK Government, NPIF aims to provide small and medium businesses with increased flexibility in the types of funding available. It provides a mix of debt and equity capital between £25,000 and £2m to SMEs at all stages of their development.

Mr Morgan said the interest rates on the loans will vary, depending on how risky the investment is.

More than 200 delegates are expected to gather at an event at the Royal Armouries in Leeds today to hear about the new funding opportunities.

Speakers include Mr Morgan, Roger Marsh, chairman of Leeds City Region LEP, and representatives from Business Enterprise Finance and Enterprise Ventures, the fund managers responsible for the local area.

It follows similar events that were held in Sheffield, Hull and York.

Mr Morgan said companies from across the region had already started applying for funding.