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Prime minister proposes funding for small businesses

A growth capital fund to boost investment in small businesses was proposed by Gordon Brown yesterday.

Speaking at the CBI conference in London, the prime minister responded to an independent report that found small businesses have suffered a “structural” lack of investment during the recession.

Speaking on the report, which was carried out by Chris Rowlands, the former chairman of private equity vehicle 3i Asia, Brown said: “Where there is a gap…in finance for companies looking to expand, we propose a growth capital fund, a credible channel for private capital to invest in these established and growing SMEs.”

It is understood that a new fund could come under the banner of the central “national investment corporation” that has previously been proposed by the government.

The Rowlands report called for the government to help small businesses to obtain funding of £2m to £10m and said that the shortage of venture capital for small businesses was a permanent rather than a cyclical problem, with investors concentrating on investments above £10m.

Rowlands said: “The easy availability of bank lending in recent years served to obscure an underlying lack of capital provision.”

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