Despite the continual stream of austerity measures that headline the news day after day, it is surprising just how much financial support is available for businesses in the North East of England. More surprising still is how much of this support comes from the ‘evil’ European Union.
Just about all support is aimed at Small and Medium Sized Enterprises (SMEs) which, in European terms, is any business employing fewer than 250 employees having either an annual turnover of less than €50m, or else has a balance sheet total that is equal to, or less than, €43m.
Whether the motivation is to grow the business to sell it later, or grow it because you have just bought a new business, this support can make a great deal of sense where any kind of investment is required. This is true even if you just want to grow the business to improve turnover or profitability. However, be clear about this – the objective is to grow the business, the funds are not really there just to keep the business ticking over.
The support is split into two broad areas: grants and investment funds. Investment funds are further broken down into loans and investment capital where equity is required. The equity side is often a little more imaginative than you might think with good innovative mixes of equity purchase and loans that can often lower the pain of extracting an initial investor further down the line.
Business Support Grants
Grants usually come as an offset against an investment in consultancy or development services. Generally speaking up to 40% support on the total fee can be obtained depending upon the eligibility of the business and the project in question. The businesses administering the support typically have a finite funding pot available over a fixed period of time. When the allocated funding pot runs out, or the project reaches the end of its time, the support stops. At the time of writing, there are several funds which will reach the end of their time in early 2015.
North East Business Support Fund
The North East Business Support Fund is managed by the Northumberland Business Service they have just this week announced that they can now fund projects that can be completed by June 30th 2015. In reality this means that funding applications will need to be in before the end of March 2015, so there is not much time left.
The fund is aimed at small consultancy projects of roughly £1000 to £3500 and up to 40% support is available depending upon eligibility.
Investment for Growth
The Investment for Growth fund is administered by the BE Group and is very close to the end. Projects have to be completed by the end of March 2015, so in reality most applications beyond the end of January 2015 will have problems with completion unless the project is very well executed.
The fund is aimed at larger sized small consultancy projects of roughly £3500 to £1500 and up to 40% support is available depending upon eligibility.
The Innovation Programme
The Innovation Programme is administered by the NE BIC has now been extended until September 2015.
This fund is aimed at reasonably substantial innovative projects of up to £40,000 which means a deadline of September 2015 will probably require a start point of no later than April 2015.
The fund can support up to 40% of the project depending upon eligibility. It is aimed at supporting the innovation and so can be used for consultancy type services to support the development programme. Costs incurred must be external to the applicant company, i.e. an external supplier. This means it cannot be used to support an R&D wage bill, or hardware, or software purchase.
Let’s Grow Programme
The Let’s Grow programme is admistered by the BE Group and is aimed at businesses with a sales profile outside of the North East England region. Grants can be obtained by any size of business, but the higher levels of support are reserved fro the SMEs.
Investment projects need to be above £200,000 with an upper ceiling around £1.5m. Criteria for support include: the location of the project, the type of expenditure involved, the size of the company and the level of job creation.
The support programme is currently scheduled to run until the end March 2017 by which time any supported project must be completed.
Investment and Loan Funds
In this category there are seven notable support funds available as follows:
- North East Micro Loan Fund
- North East Proof of Concept Fund
- North East Technology Fund
- North East Accelerator Fund
- North East Angel Fund
- North East Growth Fund
- North East Growth Plus Fund
All of the funds are aimed at SME businesses as described above. As with the grants, all funds are intended to stimulate the creation of additional employment opportunities in the North East.
North East Micro Loan Fund
This fund is managed by Rivers Capital Partners and is aimed at supporting new enterprises, or helping existing existing micro and small businesses grow.
Loans of between £1,000 and £25,000 are possible to both new and existing businesses from eligible sectors where mainstream finance would not otherwise be possible.
The loan support is targeted at specific types of businesses/people including disadvantaged individuals, sole traders, partnerships and third sector enterprises.
North East Proof of Concept Fund
The Proof of Concept Fund is managed by Northstar Ventures and is aimed at the seed stage in the technology sector – particularly in perceived high growth areas like clean-tech, digital and healthcare.
Initial investments are up to £100,000 and follow-on funding can be available where appropriate. Typical client companies are new start, early stage business seeking to test the market with a new technological innovation.
North East Technology Fund
The North East Technology Fund is managed by IP Group and is aimed at the technology and innovation sectors. The fund supports technology businesses at any stage of their development with the idea of addressing the demand for seed and development stage finance.
The maximum fund is £1.25m mad in conjunction with private finance from other co-investors, business angels and venture capital institutions.
The fund can also invest in more mature companies seeking mezzanine finance.
North East Accelerator Fund
The North East Accelerator Fund fund is managed by Northstar Ventures and investments are usually equity-based and made in conjunction with other private sector investors.
Debt or quasi-equity investments are also possible where the business case dictates.
Typically the fund is aimed at high-growth, early stage, businesses with investments ranging from £100,000 to £750,000 in a first round of funding. Further investments can be possible with limit of up to £2m in any one company.
North East Angel Fund
The Angel Fund is managed by Rivers Capital Partners and invests in start-ups and existing businesses with perceived growth potential.
Typically aimed at early stage business it is used across a wide range of business sectors. The fund generally invests between £10,000 and £150,000 wit the intention to attract significantly more capital from co-investors.
North East Growth Fund
The North East Growth Fund is administered by NEL Fund Managers. It is aimed at relatively mature companies at the development and growth stages.
Typically companies benefitting are revenue generating and seeking growth capital of up to £750,000.
A significant proportion of the money from this fund is invested in quasi-equity type deals.
North East Growth Plus Fund
The North East Growth Plus Fund is administered by FW Capital Ltd and is targeted at mature companies.
The fund deals with businesses across most sectors looking for development and growth funding. It is aimed at assisting those businesses needing a significant cash injection to facilitate a step change in their business.
Typically the fund provides larger funding packages than the North East Growth Fund – from half a million pounds up to a ceiling of £1.25m per business.