Your key to the maze

Your key to the maze

Funding is available for SMEs in the region – but tracking it down may sometimes be quite a challenge. Geoff Hodgson though has some advice to guide SMEs through the finance maze.

There is undoubtedly a feeling among SMEs in our region that the environment around finance and support is complicated and finding suitable, high-quality support is an arduous task.

This is borne out by research commissioned by North East Access to Finance (NEA2F), which uncovered as many as 106 finance initiatives and 37 support interventions offered to SMEs in the region by a range of public, private and third sector organisations.

We owe it to North East businesses and to the future economic prosperity of the region to provide clarity, transparency and simplicity in sources of finance and support; opportunities for appropriate mentoring and investor readiness training and to find a way to overcome the perception among SMEs that these initiatives are “disjointed”.

As well as working to develop new sources of public investment funding for the region’s SMEs when the current programmes end, NEA2F is committed to improving the experience of businesses and their advisers as they seek to navigate the funding and support landscape here in the North East.

Our North East Access to Finance Guide, sponsored by Ward Hadaway, is now in its third year of publication and we are currently preparing the 2013 edition. No other English region has produced such a wealth of information so indispensable to the region’s businesses and their advisers.

Access to up-to-date information regarding the latest sources of finance and support is crucial to businesses, and the current pace of change makes providing this information even more important to us. For this reason we have commissioned work to provide a digital version of the guide.

Utilising the latest responsive technology - the guide will be available to businesses and their advisers on their mobile phones, tablets and PCs - we will ensure that up to date information is only a few clicks or swipes away. This year has seen the launch of a range of Government measures introduced to support start-ups and growing SMEs.

These include a campaign to inspire people to realise their business ambitions, and to highlight the range of support available for start-ups and growing businesses, along with measures to ensure SMEs can access the finance they need and to encourage entrepreneurialism.

We in this region are also fortunate to have access to public sector investment funds in the shape of the £125m Finance for Business North East programme. This groundbreaking suite of seven investment funds is designed to drive future economic growth in North East England.

The programme provides debt and equity finance to SMEs based in, or relocating to, the North East of England, with the aim of helping them start up, develop or grow. To be eligible for support, a business must be a SME and operating in an ERDF eligible sector.

To date more than 470 companies have benefited from the programme, which shows how valuable a role public funds play in meeting the funding gap. In addition, the funds have helped to stimulate the market and bring in additional private sector cash to the tune of £65m.

Business Secretary Vince Cable, said “as businesses are continuing to struggle to get credit from their banks, developing alternative lending channels is essential, so firms are less reliant on banks”.

Many of the national initiatives discussed earlier address these alternatives. But SMEs need to be open to other sources of finance, and business “angels” and venture capital firms have their role to play. But these do not fully serve the needs of smaller businesses, many of which depend heavily on bank lending to meet their investment needs.

In recent months an explosion of peer-to-peer lending sites and crowd funding sites has emerged to fill this gap. So, even in a climate of continued austerity, it is not all doom and gloom. However, SMEs must approach fund-raising strategically to be successful.

They must research where to look for sources of relevant finance, and they must learn how to make a winning pitch. It is up to appropriate providers in the region to address their specific needs to ensure they are investor ready.

Geoff Hodgson is chairman of North East Access to Finance.