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November 8, 2023
ENTREPRENEURS and small businesses that have been unable to secure small loans from banks will be able to benefit from a new fund that has been launched in the region.
Business development company Entrust is holding the purse strings of the £5m Finance for Business North East Microloan Fund, the seventh fund to spring out of the £125m Finance for Business North East Programme.
The aim of the fund is to offer loans of between £1,000 and £25,000 to businesses within the North East that have been unable to find the money elsewhere.
It aims to provide essential support to around 700 start-ups or small businesses up to December 2014, safeguarding or creating more than 1,100 jobs in the process.
Entrust manages the fund on behalf of North East Finance, and is making the money available, without the need for security, to organisations including third sector groups.
Entrust chief executive Dan Brophy said businesses and organisations will have to demonstrate a good business plan to be considered, but that the purpose of the fund is to cater for the start-ups that have been left out in the cold by an increasingly risk-averse banking sector.
He said: “The line of last resort has moved in recent years so there are some quality proposals coming to us, some potential businesses that could be the net job-creators in the region.
“We’re not going to just invest money in people who have no plan, but instead work with people who have the potential to develop businesses, employ people and create value.”
Loans will be paid back over three years at an interest rate of 6.5% above the UK reference rate. North East Finance chief executive Andrew Miller said it would typically be offering a “sweet spot” of between £5,000 and £10,000 to businesses, which could then graduate on to support offered by other, larger funds in the Finance for Business North East Programme portfolio.
He said: “A lot of great businesses are created at a time of recession. People are made redundant or graduate from university and have to think about self-employment for the first time.
“These are high-quality people who have to make a decision on whether to leave the region or set something up. If things like this aren’t there when people think about doing something, they’ll leave the region.”
A total of 60 firms have already made inquiries about the fund, and entrepreneurs such as Bright Creatives design consultancy managing director Grant Carruthers attended yesterday’s launch event at the Centre for Life to find out more.
Carruthers said: “There was a lot more support available when we set up seven years ago, and if we had to do it again now we’d think twice. The odds are against small businesses anyway, even without the current situation.”
The event also attracted financial experts such as Anthony Josephs, commercial services partner of RMT Accountants and Business Advisers. RMT has run the rule over several businesses seeking funding to offer assurances to potential lenders.