PM proposes fund to help SMEs grow

Gordon Brown has acknowledged the need to provide SMEs with improved access to finance, target="_blank"by proposing a fund to help small businesses grow.

The prime minister's pledge to look into creating a 'growth capital fund', which would help businesses invest in their future, accompanies the publication yesterday of target="_blank"Chris Rowlands' independent review, which diagnosed a gap in the availability of finance to SMEs.

Described by Mr Brown as a "credible channel for private capital to invest in established and growing SMEs", the proposed fund would offer established businesses that were looking to expand their operations the chance to buy new equipment or take on extra staff.

While acknowledging that its findings were "unlikely to be controversial", the Rowlands Review identified a permanent funding gap for those firms seeking to attract between £2 million and £10 million in investment - something it concluded that neither banks nor equity investors are likely to step forward and fill in the near future.

The review found that the financing needs of viable SMEs must be "fully met" in order for the sector's contribution to the UK economy to be fully realised - something that would drive forward overall economic growth.

Business Secretary Lord Mandelson said: "It is now for Government and the market to work together to address these issues effectively.

"It is vital that UK SMEs can secure the investment they need to grow."

IMAGE Andrew Winning/PA Wire