Financing growth: the Regional Growth Fund

A manufacturer of overhead cranes and crane components in Derbyshire. A maker of specialist flavours, fragrances and ingredients in Suffolk. A beer bottling plant in Kent. It may sound pretty random but these three businesses have one thing in common – they all secured funding via the Regional Growth Fund (RGF).

To date, more than 3,500 small and medium-sized companies have received cash from the Fund. RGF funding is available through schemes run by national and local organisations that include local enterprise partnerships (LEPs), universities, councils and private sector firms.

Regional Growth Fund to expand your business

Across England, companies are using RGF funding to strengthen and grow their businesses. Take the crane making business Street Crane. Its factory space in Chapel-en-le-Frith was full to capacity, so the company had to expand. It applied successfully for a grant of £150,000 from the LEP D2N2 Local Enterprise Partnership Unlocking Investment for Growth programme (UI4G) as part of a £1.5 million first phase of a three-stage expansion. When finished, the whole project will total £2.7m.

“We felt an expansion of this size might be a step too far without the grant. We felt this was an opportunity to grow the business further and a chance to go for a bigger factory. The RGF grant will help grow the business further and faster than we otherwise could have done at this time” Ian Jackson, Street Crane’s financial director.

Or take the rapidly-growing laser cutting and fabrication business FC Laser, which tapped UI4G for more than £66,000 towards purchasing and installing a new £320,000 laser cutting machine at its premises, which sit next to the M1 on the Nottinghamshire/Derbyshire border. The company is only in its second year of trading but such a grant has bridged the potentially awkward funding gap that can hold back young, capital-hungry companies.

For Steve Pearce, owner of Omega Ingredients, the £30,000 secured from the New Anglia Growing Business Fund has enabled his company to purchase new machinery machine that separates flavours and mixtures and identifies components, plus a spray drier that takes a liquid flavour and turns it into a powder. This means that the company can offer a wider selection of products to a growing customer base. Steve Pearce has also used the funding for marketing for our USA launch. “It’s a new and very competitive market for us, so it requires a great deal of investment to get it off the ground and establish us there.”

Regional Growth Fund to create and protect jobs

Askern,  one of the largest manufacturers of softwood cable drums, cable reels and drums in Europe, has secured a £1 million RGF grant to build a new carbon-neutral factory that will not only safeguard 82 existing jobs but also help to create a further 92 in an unemployment blackspot.

In Suffolk, Omega has used some of its RGF money to take on new people ranging from  a senior flavourist to a warehouse trainee.

Up in Derbyshire, Street Cranes  believes that it will grow its number of jobs by more than 20% in three years.

Not far away in the same county, chocolate maker Holdsworth Chocolates is moving to a new factory unit at Deepdale in Bakewell – thanks to RGF funding from Sheffield City Region’s Unlocking Business Investment programme – and hopes to increase its workforce with up to five new staff.

Investing to gain from the Regional Growth Fund

The RGF isn’t about hand-outs: it normally takes the form of a grant or loan. Companies need to invest their own capital alongside. And sometimes it unlocks funding when other options don’t appear to be open.

When three independent breweries – Sambrooks of London, and the Kent-based pair of Ramsgate and Westerham – decided to set up a new contract bottling venture between them, they found that, despite their existing assets, it was difficult to secure finance. “We’ve come across lots of banks willing to lend on existing assets but because this was a new venture it was very difficult to find the funding we needed,” says Duncan Sambrook, founder of the eponymous Battersea brewery. A £170,000 loan from Expansion East Kent unlocked the problem and bank backing was subsequently secured.

For a Battersea brewer who is now bottling beer in Ramsgate, it’s a lesson:

“Every business needs to keep its eyes open for opportunities and the way I look at East Kent and the Regional Growth Fund is it’s an opportunity that came our way.”

Each RGF programme will have specific criteria for applications, so companies need to check this when they apply. An assessment process is applied to each bid for support, and the rate at which funds are issued are a product of that process. RGF money is drawn down by businesses at the rate agreed with Department of Business Innovation & Skills (BIS) that is right for their projects. A team of monitoring officers ensures that grant recipients stick to their plans, achieve the milestones that have been jointly set and draw down funds at the predicted pace.

Regional Growth Fund resources

To learn more about applying for RGF funding, visit the GOV.UK Guide for SMEs.

Other finance resources:

The Business Finance Advice Scheme is run by the three participating accountancy bodies, search their directories to find an expert finance adviser in your local area: