The fifth round of the Regional Growth Fund (RGF), which opened for bids in October, is only open to private sector companies seeking £1m or more, meaning that start-ups and smaller businesses are missing out, having to spend more time looking for alternative routes to finance and losing momentum in driving growth.
It has become increasingly difficult for small businesses to access Government-backed funding and despite the RGF being created to support businesses of all sizes; this latest round fails to support SMEs at a time when arguably they need it most.
While the fourth round of the RGF awarded £57m to businesses and organisations in the West Midlands, it is invariably larger businesses, such as Jaguar Land Rover, that have won the lion share of grants. This is having a positive knock-on effect on smaller companies in their supply chains, but smaller businesses in other sectors are not feeling the benefit.
It is important that funding is allocated to support businesses at all levels. The Government is very much the catalyst for stimulating economic growth and its aim to generate sustainable business and job creation can only be achieved if small businesses understand how they can go about getting the funding they require.
Within the RGF, there are separate pots of money available to businesses in the region. One example is Creative England, a million pound investment scheme to support creative and digital SMEs. Beyond this and outside of the RGF, city and county councils are promoting individual enterprise funds that allocate smaller grants to individuals and businesses.
Though there are a number of different ways in which smaller businesses can access funding, difficulties sometimes arise because it isn’t always obvious which option is best for them. Some schemes specify that they only offer funding to niche business sectors. The Government must build on its initial momentum to support smaller businesses by relaying clearly the options that exist and removing any obstacles, such as red tape around lending criteria, to make the process as simple and accessible as possible.
If the Government fails to give attention to funding allocation, there will be a continued decline in lending to small businesses and economic growth will be hampered as a result. To prevent this from happening, smaller businesses must get advice about the options open to them when seeking financial support for growth.
Joe Bates is office managing partner at Clement Keys