Lift for small businesses through new council loan fund
Shropshire Council has launched a loan fund to help new and existing small businesses that need finance when mainstream funding sources such as high street banks are unable to help.
Through the fund, loans are being made available from £5,000 up to £50,000 and payment terms can range from six months to five years.
Following a competitive procurement process, the council has chosen Impetus – a community development financial institution – to deliver the fund on its behalf. As part of the agreement, Impetus will be putting in its own resources and further external funding will be added to create a total pot of £2 million.
Businesses wishing to apply for funding will need to produce a viable business plan and provide evidence that they have attempted to source funding from a bank. Loans are available for new businesses and to support the expansion plans of existing businesses and can be used for instance on capital purchases (property and equipment), bridging and working capital.
Councillor Keith Barrow, Shropshire Council’s leader, said: “Launching this new loan fund with a commitment of £1 million demonstrates how much we value the vital role small companies’ play in the county’s economy. Around 90% of businesses in Shropshire employ 10 or fewer people and it is this group that statistics show is struggling to get finance from high street lenders.
“Through this fund we hope to help around 100 new and existing small businesses over the next four years which will, in turn create and secure jobs for local people.”
Councillor Mike Owen, Shropshire Council’s Cabinet member with responsibility for business support, said: “Through working with local businesses we know that they are still facing many difficulties when trying to secure funding. This fund will now make it easier for these businesses to access finance; enabling the county’s economy to grow and prosper – something we all know is very important.”
George Mackison, Director of Operations for Impetus, added: “Impetus looks forward to administering the loan fund on behalf of the council and will work closely with them to ensure that the fund is promoted effectively and supports a diverse array of Shropshire businesses”.
- Impetus already operates in Shropshire, but the additional funding from Shropshire Council will guarantee the extra £2 million investment over the next four years.
- Case studies of successful Impetus loan recipients are available on the Impetus website.
- Shropshire Council will have no involvement in the loan decision making process, which will entirely be undertaken by Impetus, using accepted industry practices.
- Community Development Finance Institutions, or CDFI’s, are organisations that provide loans to enterprises that have been unable to secure sufficient funds from mainstream sources. They do not compete with other lenders but instead seek to fill the gap in the finance market that inhibits enterprise development.
- Depending on the size of the loan securities might be required.