Prime minister David Cameron has challenged small firms to get out of their “comfort zone” and export goods abroad, as he announced a £95m investment fund to help the small and medium-sized enterprises (SME) sector.
Ministers reckon the scheme will unlock around £500m of new investment in SMEs, creating at least 4,000 jobs.
Part of the government’s Regional Growth Fund, the money will be administered by RBS NatWest and HSBC, which have agreed to participate in the scheme following an intervention by Lord Heseltine.
RBS and Natwest will facilitate £70m, HSBC £25m. The banks will not profit financially from the administration of these schemes.
Speaking at a business event in the capital on Thursday, Cameron highlighted the fact that although UK companies are selling nan bread to India, tea to China and canoes to Eskimos, the UK was behind countries like Rwanda for the speed at which the firms can start trading.
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“We need more of you to get out of the comfort zone and sell to the world,” Cameron said.
The PM also said that from next April it would be easier to start up in business because there will be no more filling in “endless forms”.
Speaking about the fund, Labour leader Ed Miliband said, “I don’t think the scale of the investment the prime minister is talking about is really much of a solution.”
Business groups expressed concerns that the fund wouldn’t be available to all companies desperate for growth finance.
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Steve Warwick, London regional chairman, Federation of Small Businesses, said, “It is good news that some of the money from the Regional Growth Fund is now available to small firms in London – but we are disappointed that it looks like it will not be available to all businesses that need finance to grow.
“It is clear that grants will only be available to businesses that qualify for bank finance, but we still need greater clarity around the terms and conditions attached to the funding, the forms of business activity that are eligible for the grant and accompanying loan, and a clear indication of where in the UK this scheme will be available.
“What is important, is that the scheme is communicated effectively to staff at branch level to avoid a repeat of the confusion that surrounded the introduction of the Enterprise Finance Guarantee. However, the scheme must not distract attention from the need to implement the recommendations from the Independent Commission on Banking as soon as possible, to help the wider small business community access credit.
“We know that small firms want to export but are stifled by the red tape of doing so. The FSB has called for a Europe-wide sales law to allow easier access to those markets.”
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John Longworth, director general of the British Chambers of Commerce, said, “The new SME Regional Growth Fund scheme will help some companies obtain the finance they need to grow at home. But it is not a panacea, and will not cure the wider problems companies still face in accessing finance. Banks still need to improve relationships with business customers.
“Without clear lending processes and more sensible decision-making at a local level, many businesses will still be reluctant to ask for loans and the government’s lending targets won’t be met.”
Terry Scuoler, chief executive of the Engineering Employers Federation, said: “It’s good to hear the prime minister acknowledging that companies need more support in accessing finance to grow their businesses.
“Today’s measures are a welcome step in the right direction, but the Government will need to go significantly further to ensure that firms, particularly small and medium-sized ones, have access to credit at the right cost and on the right terms.”