Five top UK banks support Business Growth Fund
19 May 2011
Five of the UK's top banks are supporting a £2.5-billion fund launched today to invest in small and medium-sized businesses that are in need of financing.
The Business Growth Fund (BGF) has been launched under the "Project Merlin" deal between Britain and its banks. Project Merlin aims to curb bank bonuses and make them lend more after a credit crisis led to a sharp downturn in bank lending. The fund would target businesses having an annual turnover between £10 million to £100 million pounds.
Under the project, which includes Barclays, HSBC and partly nationalised lenders Royal Bank of Scotland and Lloyds, the banks would lend about £190 billion to businesses this year, up from about £179 billion.
The four banks, along with Standard Chartered are backing the independent BGF, which would invest long-term capital of around £2 million to £10 million per business. In return the banks would get an equity stake of at least 10 per cent in addition to a seat on the board for one of the fund's directors.
According to fund chief executive Stephen Welton, companies of the size often had to struggle to secure financing too support their growth plans that are mostly too big for start-up funding and too small to secure larger commercial funding.
He added that the BGF would not only provide longer-term finance but also ongoing help and advice.
The BGF currently has 30 staff and plans to expand with the opening of offices in Edinburgh and London.
