2017 – Happy New Year and New Funding for Tees Valley

2017 – Happy New Year and New Funding for Tees Valley

Happy New Year! We have finally said goodbye to 2016, which saw a lot of global change with the results of the EU Referendum and the US Elections.

2017 will see change at a local level, especially in the North East funding market. The JEREMIE fund has now finished and going forward there will be two distinct sources of funding for the two different LEP regions.

A new £145m fund (simply called the North East Fund) will be launched for the North East LEP region. SME businesses in the Tees Valley and North Yorkshire LEP area will be able to access funds from the £400m Northern Powerhouse Investment Fund (“NPIF”).

The NPIF details and fund managers will be formally announced in March 2017, although some information has been published already. Four fund managers are to be selected to offer three types of funding for SMEs:

  • Microfunding: £25,000 to £100,000 micro loans repayable over 48 months
  • Debt: £100,000 to £750,000 repayable over 48 months
  • Equity: £50,000 to £2m

The funding is expected to be open to SMEs in all sectors throughout the North, replacing JEREMIE funds equivalent as far north as County Durham and Teesside.

One new feature is that the NPIF should help to support management buy outs (“MBOs”) or allow the exit of a retiring shareholder in certain circumstances.

It is expected that up to half of any investment could be used to repay exiting shareholders, with the other half presumably being used to grow and develop the business. In this way, NPIF may be able to unlock some potential MBOs and should be used as part of succession planning for SME business owners in Tees Valley, North Yorkshire and the North.

All of this is positive news and food for thought for business owners getting back to work. Whether considering their investment strategy or an exit strategy, the funds are good news!

For further information and advice, please contact Steve Plaskitt.