Those small businesses which have problems securing funding may be offered a lifeline as prime minister, David Cameron, has announced £95 million in grants will be available.
In an attempt to help kick start the economy the grants, which will come from the government’s regional growth fund, are intended for those wishing to buy machinery and other equipment.
High Street banks such as HSBC, NatWest and the Royal Bank of Scotland (RBS) which have been reluctant to lend to small and medium sized businesses throughout the recession will administer the grants.
Those who benefit from the money will receive up to £500,000 alongside a commercial bank loan, which may allow some small businesses to expand.
In return for the £95 million the government is putting into the scheme it is hoping to see £500 million of investment into small businesses.
It is also hoping that during a time in which many jobs are at risk and unemployment is at a high, the scheme could bring 4,000 new jobs to the market.
Lord Michael Heseltine, the Conservative veteran, has brokered the deal, which should mean many businesses can achieve the financial support they aren’t receiving from anywhere else.
Mr Cameron said: “I’ve lost count of the number of times people working in our small businesses have told me they just can’t get a loan for that new investment, that new clean room or that extension to their business.”
He suggested that not all of the businesses who qualified would need the maximum amount, stating that in some cases £30,000 may be all that is needed to get industry, innovation and export moving.
Those companies that apply will have to prove they have been turned down for a loan previously and annual turnover is less than £25 million if applying to RBS.
HSBC also has a limit, though it is more generous, with the ceiling being set at €50 million.
Meanwhile the lending which was pledged to small businesses by the major banks as part of Project Merlin has in fact fallen short of its target.
In February they promised to lend £190 billion in 2011, but are only on target to lend £158 billion by the end of the year.
Tweet: £95 million fund will increase lending to small businesses as project Merlin falls short of its target.