New Growth Loan Fund poised to protect and create employment
Enterprise Minister Arlene Foster has approved the establishment of a new £50 million Growth Loan Fund.
The Fund aims to generate £150 million sales growth per annum in small and medium sized enterprises (SMEs) safeguarding and creating over 2,000 jobs over a 10 year period.
It will address a gap in the market for access to finance by complementing existing sources, including bank finance, venture capital and private equity finance.
Invest Northern Ireland will provide £25 million to the Fund, which is intended to be principally financed by the European Regional Development Fund (ERDF) under the Sustainable Competitiveness Programme for Northern Ireland. NILGOSC, which administers the Local Government Pension Scheme for Northern Ireland, has agreed in principle to provide an additional £25 million private match funding to provide the total fund of £50 million.
Loans will be made to businesses that can demonstrate sales and profitability growth, or strong growth potential. Businesses that currently export and wish to further expand sales in international markets will be a key target of the Fund, as they have the potential to contribute most to Northern Ireland’s economic growth.
The Fund will provide loans, primarily unsecured in nature, of between £50,000 and £500,000 to businesses in the manufacturing or tradable services sectors only.
Arlene Foster said: “Access to finance is a major concern for local businesses, particularly small developing businesses with little in the way of tangible assets to pledge as security. As we work to strengthen Northern Ireland’s economic recovery, it is important that inadequate access to finance does not continue to depress business confidence and hamper the ambitions of companies that have strong potential for growth, particularly in international markets.
“The Growth Loan Fund is just one of the practical actions that my Department, through Invest Northern Ireland is taking forward to stimulate and encourage growth in these challenging economic times.
“Many local SME companies are viewed as high risk and they can find it difficult to secure much needed investment despite their growth potential. This new Fund will not only safeguard existing jobs but also allow small businesses to expand and create new jobs, potentially contributing over £60million per annum to the local economy.”
Borrowing and repayment structures will vary on a case-by-case basis. Applicant companies will be required to provide a Business Plan to demonstrate growth or growth potential, viability in terms of sustainable profitability, and that it has the capacity to service and repay the loan.
The Fund will be managed on a fully commercial basis by a FSA authorised Fund Manager who will be appointed through the public procurement process.
The Growth Loan Fund is part of Invest NI’s wider ‘Access to Capital’ strategy initiative.