Access to Finance - Proposals

Strand 1 - Improving Financing Propositions for Small and medium sized enterprises

This strand has built on the major finding of the initial consultation process that many small and medium-sized businesses and start-ups in the Objective 2 area failed to successfully access finance because of the poor quality of their finance propositions rather than because funding was not available. This finding was reinforced by the results of the Baseline Research study carried out in the Objective 2 area in early 2002.

Under this strand, enterprise agencies, accountants and other financial intermediaries provide advice to SMEs and start-ups seeking various forms of finance, thereby enabling them to present their case for external funding more effectively. All businesses seeking assistance are required to provide basic information in an initial diagnostic review to assess their level of ‘finance readiness'. Those businesses accepted onto the programme will then be allocated to advisers who can provide the type of assistance suitable for the business's level of readiness and type of finance sought. This may include preparation of financial plans, validation of different aspects of the SME's business model or, for businesses with very high growth potential, grooming to seek equity investment.

Business Link for London is responsible for co-ordinating the delivery of activities under this strand. For more information call 0845 6000 787 and quote 'Access to Finance or visit their website.

Strand 2- Marketing the Access to Finance Programme

The second strand recognises the considerable lack of awareness amongst SMEs of financing options available and the requirements of funders. It therefore seeks to remedy this by providing and promoting such information to businesses in the Objective 2 area of London. In addition, the finance readiness programme itself (strand 1) will be promoted as a way of tackling specific funding problems.

Business Link for London is responsible for implementing this strand, which will involve proactive and reactive measures. Initial marketing will be focused on public and private sector intermediaries, and via the Area Partnerships. A database of information will be gathered and made available through web-based systems and also promoted actively through various media.

Strand 3 - Improving the Supply of Finance

This strand is based on the evidence that despite the large number of publicly supported funds created in London over the last few years there remain gaps in funding available to businesses, in terms of geography, sector, stage and type of investment. Proposals for this strand are to establish a £10m loan fund, a £6m technology equity fund (which will be ring-fenced within a larger pan-London fund) and a £5m creative industry equity fund. The loan fund provides small loans up to £50,000, and larger loans - between £50,000 and £250,000 - for social enterprises and commercial (mezzanine type) loans. The equity funds will provided seed capital for high technology businesses and small amounts of early stage equity with a particular focus on creative businesses.

The London Development Agency is responsible for implementing the proposals under the third strand.