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Posted: Thu 6th Jul 2023
A new £200m funding scheme for businesses in the south west that was first announced by the government in 2021 has officially launched.
The South West Investment Fund (SWIF), run by the British Business Bank, provides smaller loans of £25,000 to £100,000, debt finance of £100,000 to £2m and equity investment of up to £5m.
Targeted at businesses in Bristol, Cornwall and the Isles of Scilly, Devon, Dorset, Gloucestershire, Somerset, and Wiltshire, SWIF aims "to help address market failures by increasing the supply and diversity of early-stage finance for UK smaller businesses, providing funds to firms that might otherwise not receive investment".
As well as regional disparities, particular groups also face challenges with accessing finance. British Business Bank research shows ethnic minority founders are more likely to be discouraged from applying for external finance and having their application turned down.
In addition, a funding gap for female founders accessing equity funding has persisted for several years with less than 2p in every £1 of UK equity funding going to all-female founder businesses in 2022.
The South West Investment Fund, which was first announced by the then chancellor Rishi Sunak in his autumn 2021 Budget, was launched today in Bristol.
Speaking at the event, British Business Bank CEO Louis Taylor said:
“The south west has 9% of all British businesses but they typically have attracted much less than 9% of funding, particularly in the equity space where there is a strongly and universally acknowledged bias for equity provision in the south east of England relevant to the rest of the economy.
"Our thesis is that the balance needs to be redressed. We are here to provide finance to address market imperfections and structural impediments to businesses finding the finance they want.
"This is a huge economic undertaking but it also has significant social implications as well for all the communities that are going to benefit from it."
Also speaking at the launch was John Glen MP, chief secretary to the Treasury. He said:
"There are no shortage of small businesses in the UK. There are 5.5m of them. Equally as important as their abundance is their productivity and growth potential.
“I recognise that improper access to finance acts as a significant barrier to growth. Analysing and understanding those barriers is what the government is about and we are responding appropriately.
"We are determined to identify market financing gaps and address them directly. So I hope the launch of this dedicated South West Investment Fund will offer a new, accessible avenue to businesses across the south west, especially those whose options are otherwise limited."
SWIF is delivered by four fund managers:
SWIG Finance: Smaller loans from £25,000 to £100,000 for the whole South West.
FW Capital and Maven: Debt (£100,000 to £2m) and equity (up to £5m) funds respectively for the north of the region (Bristol, Gloucestershire, North and North East Somerset, Wiltshire).
The FSE Group: Debt and equity for the south of the region (Cornwall and the Isles of Scilly, Devon, Dorset, Somerset excluding North and North East Somerset).
The funding is allocated as follows:
£11m: Smaller loans (south)
£9m: Smaller loans (north)
£23m: Debt (south)
£19m: Debt (north)
£46m: Equity (south)
£38m: Equity (north)
£54m: Investor reserve
Applications for funding can be made directly to the relevant fund managers via the South West Investment Fund website.
