A new £20 million fund that will provide Welsh small and medium-sized businesses (SMEs) with the backing they need to bid for larger contracts has been announced by Economy Minister Edwina Hart.
The Wales Capital Growth Fund, which has been funded by the Welsh Government and will be managed by Finance Wales, has been created in response to demand from Welsh SMEs for finance for a range of short-term working capital and performance bond requirements.
Welsh SMEs will now be able to apply for loans of between £50,000 and £2 million for terms of up to 18 months from the five-year fund. It aims to help up to 90 SMEs and it is anticipated it will potentially create and safeguard around 1,000 jobs over a five-year period.
The fund will help stock purchasing, project finance and also provide short-term loans to SMEs to provide cash collateral to support performance bonds issued by banks for domestic and export contracts.
The ‘evergreen’ fund will operate on a commercial basis and, by recycling investment returns, has the potential to make finance of up to £60 million available over five years. It will complement other funds managed by Finance Wales, such as the Wales JEREMIE and SME Investment Funds, which make long-term growth investments.
The Minister said: “The Fund demonstrates the Welsh Government’s commitment to encouraging business growth and meets a funding gap identified by Finance Wales.
“It will provide much-needed access to finance for SMEs that cannot currently access working capital and bonding finance from the banking market. Many Welsh businesses have the capability and capacity to secure new contracts and now, thanks to the Wales Capital Growth Fund, they can also finance the working capital they need or the performance bonds that are often required.”
Loans from the Wales Capital Growth Fund can be used for a range of short-term funding needs often associated with larger contracts. This can include one-off debtor finance, stock purchases and project finance as well as to provide security for advanced-payment, performance and warranty bonds.
For more information call Finance Wales on 0800 587 4140 or visit Finance Wales.
This is political grandstanding and nothing else. £20m is not enough. Personal Hygiene Services tried to bid on a contract to supply Heathrow’s new Terminal 2 with hand dryers, automated soap descenders and other mod cons. However, they couldn’t go through with the bid as fully drawing up proposals, costing, implementations, maintenance etc… Was in excess of £8m. The contract was massive. The £20m will just about cover two businesses let alone lots and lots of businesses to bring about noticeable growth.