Hundreds of small
businesses will benefit from government investment of £95 million
to help boost growth and rebalance the economy, Prime Minister
David Cameron announced today.
The funding is expected to create at least 4,000 jobs and unlock
around £500 million of new investment by small and medium
businesses (SMEs).
RBS, NatWest and HSBC have agreed to facilitate the distribution
of the £95 million - which is part of the government’s Regional
Growth Fund. RBS and NatWest will facilitate £70 million and HSBC
will facilitate £25 million. The banks will not profit financially
from the administration of these schemes.
Through these schemes small businesses, which are unable to
secure commercial funding for their project, have the potential to
benefit from government support through the banks’ regional
networks in order to make their project commercially viable. The
schemes announced today will provide grants to support SMEs
considering investing in new capital assets and creating new
employment.
Business Minister Mark Prisk said:
“These schemes will directly help SMEs that want to invest and
create new jobs. They will deliver a shot in the arm to local
communities and help small businesses drive local growth.
“100 per cent of the RGF funding will be provided as grants to
small businesses with the banks employing their regional networks
to administer the schemes for free.”
Peter Ibbetson, Small Business Chair at NatWest and RBS said:
“We have experienced managers in all the communities this fund is
aimed at, we are also the leading bank for asset finance - nobody
is better placed to ensure the £70 million we’ve been allocated
goes to where it’s needed most.”
Jacques-Emmanuel Blanchet, Head of Commercial Banking, HSBC UK
said:
“I am delighted that the bank is participating in the
Government’s Regional Growth Fund.”
“HSBC is committed to supporting strong viable businesses and our
Assisted Asset Purchase Scheme highlights this. The scheme will
provide critical support for businesses that are looking to grow
and recruit, enabling them to purchase the assets they need, to
achieve their goals.”
The key features of the RBS, NatWest and HSBC schemes are:
The RBS and NatWest scheme is called the regional growth fund
and will distribute £70 million; the HSBC scheme is called the
Assisted Asset Purchase Scheme and will distribute £25 million.The
funding will support new job-creating investment by SMEs across
England, in particular parts that have become over-dependent on
the public sector.100 per cent of the RGF funding will be provided
as grants to SMEs with the banks employing their regional networks
to administer the schemes on a pro-bono basis.SMEs can qualify for
a grant if they are going to invest in new capital assets, such as
plant and machinery, and create new jobs – and cannot get normal
bank finance.Grants of up to £500,000 will be awarded alongside
the award of a new bank loan on commercial terms.To qualify for
the NatWest and RBS scheme, SMEs need a turnover of less than £25
million. To qualify for the HSBC scheme the SME will need a
turnover of less than 50 million Euros.The banks will not earn any
fees to administer the scheme. Interest earned on any funds held
on the bank’s balance sheet must be used for beneficiary grants or
returned to the government.
The government’s Regional Growth Fund is a £1.4 billion fund
supporting projects that can create jobs, are based in areas
dependent on the public sector and are supported by private sector
investment.
The fund has been primarily targeted at larger firms, with a
minimum grant threshold of £1 million.
Notes to editors.
1. The key features of the schemes are:
· All the RGF funding must be used for beneficiary grants. The
banks cannot earn any fees to administer the scheme, and interest
earned on any funds held on the bank’s balance sheet must be used
for beneficiary grants or returned to HMG.
· Beneficiary grants must only be awarded to SMEs to support the
purchase of new capital assets (typically plant and machinery),
where the beneficiary agrees to create new employment or safeguard
employment that will be lost if the investment in new plant and
machinery is not made.
· Beneficiary grants can only be awarded alongside an award of a
bank loan for the purchase of the new asset – grants cannot be
used to support refinancing existing debt by a beneficiary. The
banks expect that bank loans that accompany an RGF grant will
typically be two to five times the size of the grant.
· Grants cannot be provided where the reason why the original
loan application is declined is that the beneficiary has
insufficient security to support the new debt, as in these
circumstances the government’s existing EFG scheme can help the
beneficiary access commercial funding.
· Beneficiary grants can only be awarded where the bank would
decline a loan application using its normal credit criteria for
SME lending.
· The schemes must operate in a manner that is consistent with
European State aid rules on SME Investment Aid and Regional
Investment Aid.
2. EXAMPLE
· Company X is a small company.
· It wants to purchase a new machine to enable it to expand its
operations and take on more staff.
· The machine costs £100,000, but the bank’s normal credit
criteria will only lend the company £70,000. The company can only
contribute a further £10,000 and on this basis the application for
asset finance would be declined.
· The banks, through the HSBC Assisted Asset Purchase Scheme or
the RBS and NatWest Regional Growth Fund, can award the company a
grant of £20,000, thereby providing the company with the funds to
unlock the project.
3. For more information on the Regional Growth Fund please visit:
http://www.bis.gov.uk/policies/regional-economic-development/regional-growth-fund.
4. BIS's online newsroom contains the latest press
notices, speeches, as well as video and images for download. It
also features an up to date list of BIS press office contacts. See
http://www.bis.gov.uk/newsroom for more information.
Contacts:
BIS Press Office
NDS.BIS@coi.gsi.gov.uk
Joanna Fletcher
Phone: 020 7215 5951
Joanna.Fletcher@bis.gsi.gov.uk