BGF will have 'little to no impact on overall bank lending'
May 20 2011
Many believe that few businesses can benefit from the BGF
Small business owners believe the Business Growth Fund (BGF) initiative will do little to help them access funding, finds research.
According to a study by business software and services provider Sage UK, 62 per cent of the 1,120 respondents say the Fund would have little to no impact on overall bank lending to business.
Sage UK CEO Brendan Flattery says, ‘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 funds to established businesses with a turnover of £10 million or more is hardly a step-change to the status quo, where banks remain highly conservative, and risk averse in their lending.'
The independent fund of up to £2.5 billion, backed by five of the UK’s main banking groups and working in collaboration with the British Bankers’ Association, will invest between £2 million and £10 million per business in return for a minimum 10 per cent equity stake.
Business Secretary Vince Cable, who helped launched the Fund says, ‘Alongside new government support for exporters and commitments made by the banks to increase the credit available to businesses of all sizes, this private fund will provide crucial support to the firms generating the employment our economy needs.
‘To see the fund ready to invest so quickly is greatly encouraging and I look forward to the first successful firms receiving funding.’
However, entrepreneur Charlie Mullins, founder of Pimlico Plumbers, has branded the Fund as ‘Fools Gold’ and warns small and medium-sized enterprises (SMEs) to steer clear. Says Mullins, ‘There is no chance in hell I would ever hand over part of my company to a bunch of bankers in exchange for some of their tainted cash. Why would any sane business person allow a bank to have shares in their operation and a seat on the board?
‘I strongly advise every other SME business owner in the country to show Vince Cable and his mates in the City the door when they come waving fools gold in their faces.’
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