North East business funding comes under fire

For many years One North East and Business Link were the go-to destinations for businesses in the region looking for finance. In the wake of the Coalition’s decision to disband both of these services, many companies in the region are feeling increasingly concerned about where business support and funding will come from in the future.

While the Government has promised a Plan for Growth, what this entails remains a hazy and undetermined ideal. Furthermore, the highly anticipated Local Enterprise Partnerships have yet to have any real impact on the regions they serve, and concerns over their role in the development of the Private Sector. We asked the ‘State of the Region’ panel along with experts from across the North East for their opinions on the current funding landscape.

Martin Callanan, Conservative North East MEP was quick to stress the presence of £2.4 billion in Regional Growth Funding which is available to a wide range of businesses, and called on them to consider it as areal option for boosting growth.

“Round three is approaching and I would encourage local firms to begin putting their submissions together now.

“I also welcome the Government’s credit easing programme as well as using the tax system to encouraging financial support to businesses, such as the enterprise investment scheme.”  

By contrast, Catherine McKinnell, Labour MP for Newcastle North was quick to criticise the Governments proposals for stimulating growth, accusing them of not being a “properly thought out strategy”, though admits that they do hold some potential.

She commented: “The Regional Growth Fund, which is an excellent potential stream of funding, has proved little use to the North East so far, as only two firms in the North East have used it to match fund European investment that is sitting waiting to be distributed here in the region, so this source of funding may simply be lost, unless the government supports the use of it.  

“In my opinion, this is an excellent funding prospect for the North East and I have raised the issue of how to make the best use of it in Parliament and will continue to do so.”

Paul McEldon, chief executive of the North East BIC believes that businesses should not be disheartened by the difficulties involved with directly applying for Government funding, and should remember that there are other agencies in the region which can still provide support.

“Along with our partners, the North East BIC runs the New Entrepreneurs Allowance in the region, where unemployed individuals can access business support, a £1000 loan and an allowance of up to £1,000 to help them during the all important early days in business.

“On a larger scale there is a large amount of equity / loan funding available in the region via North East access to finance which growth-orientated businesses can access.”

While it appears that funding is available, what is still missing is a lack of confidence. It is difficult to ignore what is happening in the Eurozone, and is a real concern for businesses as it often directly affects the sort of finance they need, as well as potential export markets. Furthermore, bank led finance schemes such as Better Business Finance have not been the great success that the Government had hoped.

Mr McEldon continued: “Banks will obviously only lend to viable businesses so the real challenge is to assist companies and individuals with accessing markets and customers to be able to present viable plans to banks.”

“Conversely there also appears to be more of a reluctance of businesses to take on further debt given the uncertainty in certain markets which contributes to the lack of lending that is being reported.”

Now eminent businessman Bill Midgeley has made calls for the Government to strengthen its’ dialogue with businesses to find out exactly what they need to promote growth.

He added: “Funding requires a national input so far as overall grant allocations are concerned.

“Decisions need to be made locally on distribution and priority and to a local agenda.”