Revealed: Fifth of public sector business funds have closed since August
Posted by Dan Martin in Finances on Tue, 08/03/2011 - 13:36
Almost a fifth of government-backed funds aimed at businesses have closed during the past six months, new research reveals.
According to UKFunders, which tracks over 1000 business finance schemes from public and private sources, the number of active public-sector business funds fell from 275 in August 2010 to 225 in March 2011, a drop of 18%. Of these, 92% were targeted at start-ups or small businesses.
Funds run by local and regional government have been the worst hit with 20% closing. Those run by devolved governments have fared slightly although even there 13% of funds have been shut down. Among the casualties are well reported closures such as the Grant for Business Investment as well as many smaller funds.
Many of the schemes and initiatives previously provided funding to start-ups and small businesses in deprived areas of the UK. Businesses in South Tyneside, for example, can now no longer access Business Start-up Grants or the Micro Loan Fund, whilst those in the region of Newark and Sherwood District Council have seen seven funds shut.
Stephen Bence, director at UKFunders, said: "This research unveils a worrying trend for businesses across the UK who are already suffering from the effects of low levels of bank lending. Particularly hard hit will be start-ups and small businesses who previously had access to a much larger number of local government run loan, grant and venture capital funds.
"I can only see the situation getting worse as the Regional Development Agencies wrap up their funds in advance of their own wind down. If the government is serious about stimulating the economy through growth in small businesses, it must ensure that those businesses have adequate access to funding."
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