Small businesses chief hits out at ‘diabolical’ lending figures

A HANDFUL of companies in Yorkshire have benefited from a Government fund set up to support small-and-medium-sized enterprises.

The regional growth fund for small-and-medium-sized enterprises (SMEs) uses high street banks to provide finance for firms who want to buy assets and create employment but are unable to secure commercial funding for their project.

The funding is being distributed by Royal Bank of Scotland Group (RBS), which includes NatWest, and HSBC as part of the Government’s wider £2.4bn programme.

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Since the funding for SMEs was launched in November 2011, five deals have been completed in Yorkshire by RBS and NatWest, comprising £339,000 of regional growth funding and £1.56m of bank funding.

Nationally, the two banks have completed 58 deals comprising £2.8m of regional growth fund and £12.4m of bank funding.

Meanwhile, HSBC has completed three deals nationally under its Assisted Asset Purchase Scheme, which is part of the regional growth fund, none of which are in Yorkshire. It could not give a figure for the value of the grants.

Gordon Millward, regional chairman for the Federation of Small Businesses, described the figures as “diabolical”. He said: “Even though the funds are available, banks just aren’t interested in lending to small businesses which only need a bit of money to expand. They want to keep the money themselves and make it as difficult as possible for companies to borrow.

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“All the funding at the moment is going to larger businesses rather than the very small companies.”

However, HSBC said it wanted more SMEs to come forward for the funding.

A spokesman said: “We have been extremely encouraged by the level of interest in the regional growth fund generally and the number of deals in the pipeline.

“We are in discussions with a number of companies in the Yorkshire-region regarding HSBC’s Assisted Asset Purchase Scheme and it is anticipated the first deal may complete within the next few weeks.

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“There is definitely appetite within the region, however we hope more customers come forward.”

The Government hopes the regional growth fund for SMEs will create at least 4,000 jobs and unlock around £500m of new investment.

The support is available to qualifying SMEs located in England, excluding London and the South East, between 2011 and 2015.

Liam Kane, regional director for NatWest Commercial Banking in Yorkshire and North Derbyshire, said: “We are proud of our lending record and we are approving 90 per cent of all applications for new lending across the country.

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“The RGF is an additional option where we feel we can’t provide a customer with funds through our normal channels so the level of lending relies on both demand for traditional lending and the number of customers who then require use of the RGF.

“We are happy with our level of lending through the fund so far and will continue to use it as and when our customers can best benefit from it.”

RBS Group has been allocated £70m from the £2.4m regional growth fund, while HSBC is distributing £25m from the fund. Grants of up to £500,000 are awarded alongside the award of a new bank loan.

Meanwhile, Santander is to receive £50m from the regional growth fund to distribute to customers, although a spokeswoman said the bank is not yet in receipt of the funds.

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Barclays, which is not currently involved in the regional growth fund for SMEs, said it is in advanced talks regarding the fund and expects to make an announcement in May.

Lloyds Banking Group did not respond to calls from the Yorkshire Post.

A Department for Business spokesman said: “We have allocated almost a third of rounds one and two of the fund to bidders who will make RGF money available to small businesses in their area – that is over £400m.

“These schemes were set up specifically to make sure that small businesses could access the regional growth fund, either through the banks or through other similar schemes.

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“SMEs can apply directly to the next round of the fund, if the individual bid is for over £1m, or they can work with other organisations to collaborate as part of a wider programme bid.

“Round three of the fund is currently open and there will be a roadshow in York today to give potential bidders the opportunity to find out more about the fund and get their advice on their proposals. Round three closes on June 13.”

Funding for small businesses remains a huge issue, with businesses complaining that banks are unsupportive and banks insisting there is not enough demand from the companies.

Last week, a Government-backed taskforce, led by Legal & General boss Tim Breedon, warned that businesses will face a £190bn funding gap in five years unless more is done to stimulate alternative forms of lending to banks.