SMEs welcome launch of Business Growth Fund

This week has seen the official launch of the £2.5 billion Business Growth Fund (BGF), which will provide loans for medium-sized businesses that have been struggling to raise funds since the financial crisis.

HSBC, Standard Chartered, Lloyds, Barclays and Royal Bank of Scotland, have all provided the backing for the BGF, agreeing in the process to increase their lending capacity to small companies. The agreement was hashed out during the recent Operation Merlin talks between representatives of the British financial industry and the Government.

The fund will aid businesses with turnovers of between £10 million and £100 million, providing them with long-term development capital of between £2 million and £10 million. In return for the investment, the fund will take a minority stake in the company and a place on the board.

The chief executive of the BGF, Stephen Welton, said, "This will give businesses the boost they need to create new products and services, sell to new markets and create new jobs.

"Companies of this size have often struggled to secure financing to support their growth plans - too big for start-up funding and too small to tap into larger commercial funding."

The BGF, which is based in Birmingham, currently employs 30 staff and plans to expand by opening offices in Edinburgh and London.

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