Pounds 45m Aid Package for Small Companies; FINANCE WALES: Development Bank to Provide Loans and Management Expertise

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DEVELOPMENT bank Finance Wales yesterday received a pounds 45m cash injection, which will be used to help small businesses to flourish.

Finance Wales, a subsidiary of the Welsh Development Agency, was established two years ago as a bridge to fund businesses having problems raising financial backing.

Finance Wales say the injection, made up of pounds 19.7m in European Objective One funding and pounds 25.3m from Barclays Bank will enable it to achieve a target of assisting small firms to create 10,000 jobs over the next five years.

Barclays, which successfully tendered to provide match funding, has loaned its funding to Finance Wales, which has agreed terms to repay the loan with interest.

Companies receiving funding will also have to repay loans with interest to Finance Wales, which will then be ploughed back into other funding arrangements.

The new money will reinforce the pounds 35m from sources already at the organisation's disposal, including the National Assembly and the Welsh Development Agency.

A further pounds 20m in Objective Two funding should be released next year.

First Minister Rhodri Morgan said, "Our own home-grown companies will play a key role in the development of the Welsh economy in the coming years.

"In the past, lack of capital for expansion has often been cited as the reason why small companies have not flourished in Wales. One of the Assembly's first decisions was that Wales needed this kind of development fund to back our small and medium enterprises and so I am delighted that Finance Wales is taking shape so effectively to ensure that Welsh entrepreneurs can build successful businesses in Wales.

"The pounds 20m awarded to Finance Wales is the largest funding package awarded from Objective One funding to date."

Finance Wales's chief executive Colin Mitten said the Cardiff-based organisation would aim to invest in some 4,000 new or expanding ventures - providing them with management expertise as well as money.

A new structure of local representation around Wales and a broader range of funding mechanisms will enable Finance Wales to raise its lending four-fold in terms of the number of small firms helped annually. …