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Sources of finance for SMEs

The credit crunch has reduced the availability of traditional funding sources for all businesses.

The Government has attempted to counteract this by introducing the EFG scheme for SMEs, and also the working capital scheme (a 50% guarantee to lenders on their working capital loan portfolios) and the capital for enterprise fund – a quasi venture capital fund providing equity of £250,000 to £2m for SMEs.

There are also various regional bodies that provide support and funding for SMEs. I recently attended a seminar, hosted by the ICAEW and Finance South East (FSE). FSE, which is financed by the South East England Development Agency provide a suite of funding options aimed at SMEs, such as:

  • Grants – available for R&D, up to a maximum of £500,000, but typically much lower than this
  • Commercialisation loans – up to £60,000 for pre-revenue businesses with a clear USP, repayable on basis of future income 
  • Seed fund – venture capital fund which requires matching private investment, up to £250,000 of capital for ambitious, growing businesses
  • Accelerator loans – up to £100,000 to fund expansion for high growth potential businesses (not for working capital)

These funding sources can offer critical support for SMEs, and it is worth considering if your business could qualify.



Date: 9th April, 2009
Author: Julian Dobbin


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