The elusive grant
Nov 15 2011
The latest £95 million 'grant' offering from the Regional Growth Fund (RGF) is just another example of the government purporting to help small businesses but missing its target entirely.
RBS and NatWest will ‘facilitate’ £70 million and HSBC £25 million for projects that can create jobs, are based in areas dependent on the public sector and are supported by private sector investment. We’re told that the funding will create at least 4,000 jobs and unlock around £500 million of new investment by SMEs, as well as affording vilified banks – who will ‘not profit financially from the administration of these schemes’ (natch) – the chance to give something back.
But delve beneath the hyperbole and inflated promises, and what of substance can be found? Well, it’s up to the smallprint to reveal that grants of up to £500,000 will be awarded alongside the award of a new bank loan on commercial terms. So this attempt to unlock bank finance for businesses will help only those which could have secured a loan anyway.
The type of businesses that call me every day seeking advice on obtaining a grant are often the embattled SMEs that are scraping their way through life having been denied the sort of funding opportunities that would kickstart their business. These are the enterprises that could do with this kind of help.
So now, as well as having to endure the banks continually slamming the door in their face, these company owners are dangled a carrot that is perpetually beyond their grasp.
In the coming weeks I will be writing about the new movement of social funding, where businesses can raise money online through multiple 'armchair investors'. The method seems to have been born from the frustration experienced by business owners fed up with the lack of funding avenues, as well as by the sense of exclusion engendered by such things as the latest RGF initiative. Start-ups would do well to check out such options.
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