Newcastle Upon Tyne – 20 May 2011 - The Government’s launch of the Business Growth Fund (BGF) is aimed at helping growing businesses with a turnover of between £10m to £100m, but small business owners believe the initiative will do little to help them access funding, according to research from business software and services provider Sage UK.
Despite widespread publicity, the BGF has attracted controversy, with a number of influential businesses commentators criticising the scheme. The initiative has also received a luke-warm response from small business owners, with 62% of respondents to Sage’s monthly Omnibus of over 1,000 SMEs stating it would have little to no impact on the overall picture of bank lending to business.
Brendan Flattery, CEO of Sage UK, which has 800,000 customers in the UK, commented: “Whilst initiatives like the Business Growth Fund are at least a step in the right direction, the criteria set for application to the fund means that relatively few businesses can actually benefit. Opening up finance to established businesses with a turnover of £10m or more is hardly a step-change to the status quo, where banks remain highly conservative, and risk averse in their lending.
“Speaking to our customers, the issue remains that smaller businesses and start-ups are still routinely being denied access to finance at a time when many are being hit hard by rising costs, fuel charges and VAT. It’s good to see pressure being put on banks to open up lending, but the problem of wider access to finance among smaller businesses and start-ups still seems unresolved.”
The BGF will invest between £2m and £10m per business in return for a minimum 10 per cent equity stake and a seat on the board. The fund was established as part of the Project Merlin discussions between banks and politicians and recently appointed former 3i man Richard Bishop as head of investments.
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About Sage (UK) Limited
Sage (UK) Limited is a subsidiary of The Sage Group plc, a leading global supplier of business management software solutions and related products and services, principally for small to medium-sized enterprises. In the UK, Sage provides software and services to more than 800,000 businesses ranging from start-ups to large companies. This software ranges from accounts software and ERP, HR and payroll software, forecasting software and business intelligence software to customer relationship management, e-business and help for start-ups. Services include Excel Support, HR Advice, Health and Safety Advice and training courses.
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