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SMEs urged to access £2.5bn R&D funding pot

Date Added: 03/01/2014  

There are daily news reports advising us that the UK economy is improving, but banks still appear to be reluctant to lend money to small to medium-sized enterprises (SMEs). 

A business’ survival relies heavily on innovation and growth, and this in turn depends on renewed investment. 

When business owners come to apply for finance, banks don’t often find this type of activity worthy of investment. 

Government research reveals that bank lending to SMEs peaked in 2009 and has declined ever since then. Corporate lending peaked in 2008 and has experienced an even sharper drop due to the credit crunch.

Even though the economy is improving, bank lending to SMEs has not yet shown any signs of recovery. The bank lending for smaller SMEs with less than a £1 million turnover has exhibited the greatest decline.

However, banks are not the only source of finance on the market - research and development (R&D) funds are also a viable option.

At the moment, SMEs in the north west of England are being urged to apply for access to a new European Union funding pot worth approximately £2.5 billion.

The money became available yesterday (January 1st) and is to be used to aid product development.

Individual businesses are allowed to apply for up to £2.5 million of funding to aid new research and development projects. 

The dedicated SME instrument is part of the research and innovation programme Horizon 2020. 

This programme has been seen as a means to drive economic growth and create jobs. European leaders and members of the European parliament agree that research is an investment in our future.

Horizon 2020 is unique as it does not require SMEs to join larger consortiums and applicants will receive a response to their funding request within six months of submission.

Paul Tranter, chief executive of Pera Technology, said: “Never before has this level of funding been made available to small and medium sized business for new product development purposes.”

It’s important for business owners to know that banks are not the only source of funding available and they should not be disheartened if their applications are rejected. 

Persistence paired with innovation is the key to survival for SMEs. 

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