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BOOST FOR DISADVANTAGED COMMUNITIES -£11M FOR INNOVATIVE SCHEMES

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Small business minister Nigel Griffiths today announced£11.3m funding for 19 schemes that will help to deliver sig...
Small business minister Nigel Griffiths today announced £11.3m funding for 19 schemes that will help to deliver significant investment to disadvantaged communities around the country.

The finance, which comes from the Small Business Service's (SBS)

'Phoenix Fund', will boost entrepreneurship amongst deprived areas by

providing continued support to the burgeoning network of Community

Development Finance Institutions (CDFIs). CDFIs provide finance and

business assistance to potential entrepreneurs and small firms who

are often unable to access the finance they require from banks and

other conventional sources. Given the right backing, these

enterprises can have a positive impact on the communities in which

they're based.

Speaking at the launch of CDFI funding for Hastings-based, 1066

Enterprise Ltd, Mr Griffiths said:

'Entrepreneurs play a crucial role in rebuilding Britain's

disadvantaged communities, but in some parts of the country they're

unable to get the finance they need from conventional sources. Yet

businesses operating in these areas need investment like all other

businesses.

'Today's funding is another step on the road to creating jobs and

prosperity across all areas of the country.'

Today's announcement is for the third tranche of funding from the

Phoenix Fund for CDFIs and takes the total support to £31m over

the last eighteen months. The latest cash boost will help fill the

gaps that exist in SME funding across certain parts of the country

and will broaden the funding opportunities for underrepresented

groups, such as women entrepreneurs and the socially excluded.

Examples of the CDFIs benefiting from today's announcement include,

The Fredericks Foundation based in SE England, who provide finance to

lone parents, ex-offenders and the disabled to set up in business and

First Enterprise Business Agency who operate a loan fund targeting

ethnic minority businesses in greater N ottingham, an area whose SMEs

have greater difficulty accessing finance than in other parts of the

country.

Notes

Support from the Phoenix Fund is allocated to CDFIs on a competitive

challenge basis. The assessment process consists of a review against

published criteria by SBS Investment & SME Finance Directorate

officials followed by focused region- specific discussions between

officials and their counterparts in each of the RDAs. SBS regional

teams and government offices also have the opportunity to make

contributions to the process. A series of regional papers, informed

by individual papers on each application, are then presented to and

rigorously considered by Small Business Investment Taskforce.

DESCRIPTIONS OF PHOENIX FUND ROUND 3 CDFI PROJECTS

RECOMMENDED FOR SUPPORT BY SMALL BUSINESS INVESTMENT TASKFORCE

Multi-Regional

Local Investment Fund (LIF) (£500,000 for Capital purposes) LIF wish

to enhance the Adventure Capital Fund (ACF), a Home Office initiative

intended to help capitalise social enterprises to effectively deliver

public services, by offering smaller scale 'patient capital' in the

form of innovatively structured loans and investments of up to

£50,000. This proposal offers the opportunity to evaluate co-lending

with local CDFIs, profit-sharing mechanisms and royalty-based

repayments and thus the overall viability of achieving the 'double

bottom line' of both financial and social return.

Street UK £630,000 (for Revenue purposes)

Street UK is a specialist micro-finance organisation supporting

micro- enterprises, including many emerging from the informal

economy, with a thorough package of networking, business advice and

access to finance. It plans to widen the geographic coverage and thus

number of enterprises supported in the North East, West Midlands and

London. There is clear evidence of further demand for Street UK's

services and the application for reven ue support will ensure that

external capital already raised is used to best effect.

North East

Cashpoint for Social Enterprise (NESEP) £297,500 Revenue, £500,000

Capital CashPoint will serve social enterprises across the North East

and through them will respond to the needs of the diverse range of

disadvantaged communities that exist in the region. One North East is

very supportive of the application, regarding it as an integral

element of the brokerage model that they are developing for business

support throughout the region.

Project North East (PNE) £140,000 Revenue, £300,000 Capital

PNE is a well-established organisation that has been delivering

business support in the North East for 20 years. The proposed new

fund will focus on assisting SMEs in wards in the North East region

falling within the 25% most deprived wards in England as measured by

the IMD, with particular emphasis on businesses within identifiable

clusters and those developing in incubators within these areas. The

bid has the support of One North East.

South East Northumberland Enterprise Trust (SENET) £90,000 Revenue,

£200,000 Capital

SENET are targeting an area of high deprivation where no CDFI is

currently operating. Support will be concentrated on the long-term

unemployed and other socially disadvantaged groups in the former

coalfield and rural areas of Northumberland. SENET are an established

organisation with good links to other business support providers and

their plans have the support of One North East.

North West

Several proposals are currently under review for possible support in

the next tranche of projects.

Yorkshire & Humber

Partnership Investment Fund (PIF) Micro Loan Fund £616,000 Revenue

The PIF Micro Loan Fund is a region-wide fund targeted at individuals

and SMEs located in the Yorkshire Objective 2 areas and which are

unable to access mainstream finance . Loans of between £3,000 and

£15,000 will be offered. Yorkshire Forward is highly supportive of

the proposal, which they regard as based on a strong partnership

between the public and private sectors. Phoenix Fund revenue support

will enable the effective deployment of £5m of public (45%) and

private capital (55%) that has already been committed to the Fund.

Partnership Investment Fund (PIF) Small Loan Fund £858,000 Revenue

PIF Small Loan Fund is a region-wide fund targeted at SMEs located in

the Yorkshire Objective 2 areas, unable to access mainstream finance.

Loans of between £15,000 and £100,000 will be offered. Yorkshire

Forward is highly supportive of the proposal, which they regard as

based on a strong partnership between the public and private sectors.

Phoenix Fund revenue support will enable the effective deployment of

£10m of public (45%) and private (55%) capital that has already been

committed to the Fund.

Key Fund South Yorkshire (KFSY) £128,000 Revenue, £1,000,000 Capital

KFSY provides a range of grant and loan products to social

enterprises and other businesses that can demonstrate positive social

outcomes across the whole of South Yorkshire. The current project

will enable KFSY to expand their lending operations. Yorkshire

Forward are fully supportive of KFSY's bid and have noted that it is

consistent with the Regional Economic Strategy and complements the

work of the PIF Funds and South Yorkshire Investment Fund.

Bradford Chamber of Commerce & Industry (BCCI) £90,000 Revenue,

£360,000 Capital

BCCI intend to establish a CDFI targeted towards individuals and

small businesses operating in Bradford. Loans of between £1,000 and

£15,000 will be offered, with a range of linked business support

services including advice, training and mentoring.

East Midlands

First Enterprise Business Agency (FEBA) £185,000 Revenue, £ 1,000,000

Capital FEBA currently operate a loan fund targeting ethnic minority

businesses in Greater Nottingham. With this further support FEBA will

expand their operations across the Region. EMDA are fully supportive

of FEBA's plans, commenting that it fits with Regional Strategies,

builds well on other initiatives and is addressing a market failure.

Derby Loans £75,000 Revenue

Derby Loans is a new CDFI following the 'Money Line' model offering

personal and business lending to financially excluded individuals and

businesses in the City of Derby. Derby Loans achieved CITR

accreditation in March 2003. An offer of revenue support is proposed,

linked to Derby Loans successfully raising capital in accordance with

their CITR accreditation.

West Midlands

North Staffordshire Risk Capital Fund Plc (NSRCF) £90,000 Revenue,

£375,000 Capital

The NSRCF aims to support the development of local businesses in a

disadvantaged area that does not currently have access to a CDFI.

NSRCF are an innovative private sector led organisation that has

achieved CITR accreditation and is currently raising capital from

investors. NSRCF have developed effective partnerships within the

sub-region and Advantage West Midlands are supportive.

South West

South West Investment Group (SWIG) £200,000 Capital

SWIG intends to work in partnership with the Women's Business

Development Agency (WBDA), in order to make loans of between £500 and

£5,000 to women entrepreneurs located in Cornwall. SWIG and SWERDA

regard the proposed fund as a pilot that, if successful, will be

rolled out across the region.

Wessex Reinvestment Trust (WRT) £150,000 Revenue, £450,000 Capital

WRT is a wide-ranging organisation intending to address social

exclusion, business development, personal finance and property

matters (both residential and commercial) among rural communities in

Devon, Somerset and Dorset. Phoen ix Fund support would be focused on

start-up and SME lending. SWERDA believe there is a definite need for

a CDFI to serve the rural communities of Wessex.

East of England

Several proposals are currently under review for possible support in

next tranche of projects.

South East

1066 Enterprise Ltd (1066) £90,000 Revenue, £500,000 Capital

1066 plan to make loans of between £3,000 and £25,000 to start-ups

and growing businesses located in East Sussex. Research undertaken by

1066 shows that 36% of start-ups in East Sussex are unsuccessful in

accessing finance agaist a national figure of 24%. SEEDA are

supportive of the 1066 bid and have confirmed that the Hastings area

is recognised as facing significant economic challenges problems and

is not currently served by a CDFI.

Enterprise Agency of North Kent (EANK) £165,400 Revenue, £301,500

Capital

EANK intends to make loans of up to £5,000 to start-ups and up to

£15,000 to existing for-profit SMEs and social enterprises. EANK will

particularly serve the BME community, the unemployed, women

entrepreneurs and social and community enterprises. SEEDA believe

there is a strong need for a CDFI in North Kent.

Fredericks Foundation (Fredericks) £237,578 Revenue, £750,000 Capital

Fredericks already make loans of between £500 and £5,000 to

individuals, especially lone parents, ex-offenders and the disabled,

seeking to start their own businesses. Phoenix Fund support will

enable Fredericks to broaden the geographic scope of their operations

in Berkshire, Hampshire, Surrey and Sussex. Fredericks is unusual in

that that it is a private sector solution, which was created by a

successful entrepreneur who wished to put something back into the

community by giving others the opportunity to start a business. SEEDA

are supportive.

London

Ethnic Business Development Corporation (Ethnic Mutual) £77,0 00

Revenue

Ethnic Mutual plans to make loans of between £500 and £20,000 to

primarily, but not exclusively, the black minority ethnic (BME)

community in London. Ethnic Mutual believe that their proposed fund

will enhance their existing strong links with the BME community. The

LDA believes that Ethnic Mutual could provide useful coverage in

areas that currently do not have access to a CDFI, especially in

South and West London. Ethnic Mutual are only seeking revenue support

as they believe that they will be able to raise the necessary capital

from banks, wholesale CDFIs and from among the BME community.

Hackney Business Ventures Enterprise (HBV) £214,221 Revenue, £750,000

Capital

HBV make loans of between £3,000 and £25,000 to start-ups and

existing businesses seeking to grow. HBV have previously received

Phoenix Fund support and have a successful model that they are now

keen to replicate in the boroughs that border those that it already

serves in the North East of London. The LDA are supportive of HBV's

focus on enterprise growth and the fact that it is extending

geographic coverage. By building upon existing work the proposal

provides some scope for useful economies of scale.

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