Building strong foundations to ensure positive future

Jun 30 2009 by Karen Wilson, The Journal

FOR young companies in fiercely competitive marketplaces, the tightening of bank purse strings makes it difficult to attract the finance needed to grow.

Nurturing developing companies is a key component of the Regional Economic Strategy with its aim of creating 22,000 new businesses by 2016.

The recession has placed a greater onus on the North East’s Access to Finance programme, to fill the void left by financial institutions reining in lending.

Without financial support, many early stage companies would not make it past the first hurdle.

The North East Regional Investment Fund Limited (NEIF) was one of the primary sources of funding for newly-created SMEs. The £30m fund offered unsecured mezzanine loans up to £500,000 to smaller firms unable to raise finance through traditional high-street lenders.

One North East specifically designed the fund to help firms at this critical time in their development.

The NEIF is just part of a comprehensive suite of funding underpinned by publicly backed investment – helping some of our most dynamic companies at critically important stages in their evolution.

The North East has more money available to invest in SMEs per head of the population than any other English region.

As well as NEIF, One North East is pumping millions into successful existing investment funds at the same time as drawing up plans to unlock a £125m pot of European cash.

Now the focus is on future Access to Finance, with One North East and North East Finance (formerly NStar) leading the region’s bid to land a major European pot of funding.

One North East and North East Finance are preparing a case to secure £125m for the region from the JEREMIE initiative.

The Joint European Resources for Micro to Medium Enterprises initiative is the brainchild of the European Commission and European Investment Bank aimed at boosting SME finance.

A number of individual investment funds will hang off the JEREMIE Holding Fund. While the region would get the funds it needs, we could also build significant critical mass and enhance the region’s profile with investors.

These resources will help us to create a very large long-term legacy, so in 10 years time we will hopefully have funds to continue the good work, long after the European structural programmes have ended.

Malcolm Page is One North East deputy chief executive

One North East and North East Finance are preparing a case to secure £125m for the region