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financial assistance

Investors may be entitled to a range of financial incentives and support. Some of this support is specific to Tyne and Wear, while other incentives are to the wider region and the UK as a whole.

Selective Finance for Investment (SFI)

The major national form of assistance administered by the UK government is Selective Finance for Investment (SFI), formerly known as Regional Selective Assistance. SFI is a discretionary grant available to manufacturing and service sector projects that meet certain requirements:

  • The project must make commercial and economic sense, and must demonstrate improvement in productivity and skills.
  • It must take place in an assisted area. Most of the major industrial and commercial centres in the North East have assisted area status.
  • It must involve capital expenditure of at least £50,000 and create or safeguard jobs in the area. It should be of net benefit to the UK economy as a whole.
  • The grant should enhance the project in some way, for example by allowing it to go ahead in the UK as opposed to an alternative location, or by compensating for additional risk.
  • The amount of assistance available under SFI is the minimum necessary to enable the project to go ahead in the UK.
  • The levels of support available are determined on a case-by-case basis. In practice it is closely linked with capital expenditure and the number of jobs which the project creates. The maximum amount of SFI payable, imposed by the European Union, can range from 10-35% of capital expenditure depending on location and size of company.

The same rules apply throughout the UK such that the same levels of grant will apply to all equivalent areas of the UK. Tyne and Wear Development Company is able to offer initial guidance on a project’s eligibility for SFI and introduce potential investors to the grant awarding body.

Grant for Research and Development

The DTI’s Grant for Research and Development is aimed at business start-ups and existing small to medium enterprises. The grants are offered to help businesses carry out research and development work that will lead to technologically innovative new products or processes. There are four types of grants:

  • Micro Project grants help you develop a simple, low cost prototype of an innovative product or process. Project duration is up to 12 months. Eligible companies need to employ fewer than 10 full time employees and have an annual turnover of no more than 2million euros. Percentage of costs covered is 50% to a maximum of £20,000.
  • Research Project grants help you to assess the technological and commercial feasibility of innovative technology for creating a new product or process. Project duration is 6 to 18 months. Eligible companies need to employ fewer than 50 full time employees and have an annual turnover of no more than 10 million euros. Percentage of costs covered is 65% in Tier 2 areas to a maximum grant of £75,000.
  • Development Project grants help you develop a pre-production prototype of a new product or process involving a significant technological advance. Project duration is 6 to 36 months. Eligible companies need to employ fewer than 250 employees and have an annual turnover of no more than 50 million euros. Percentage of costs covered is 40% in Tier 2 areas to a maximum of £200,000.
  • Exceptional Development Project grants help with the development of a new technology that is strategically important to the UK in one or more industrial or technology sectors. Project duration is six to 36 months. Eligible companies need to employ fewer than 250 employees and have an annual turnover of no more than 50 million euros. Percentage of costs covered is negotiable up to 35% subject to a maximum grant of £500,000.

For further information contact the Grants team on 0191 229 6882 or GRD@onenortheast.co.uk

The Evolve Mezzanine Fund

The Fund is managed by Evolve Finance, the specialist debt and mezzanine division of NEL Fund Managers Limited. Evolve invests via unsecured loans which always include the right to subscribe for a small amount of equity (less than 10%).

Funded by Barclays Bank and the European Regional Development Fund (ERDF), the Evolve Mezzanine Fund will provide gap funding to growing SMEs (although not start ups) in circumstances where alternative sources of funding are not available because of a lack of security or track record.

Investments will range from £50,000 to £500,000.

NStar, NStar Finance and Business and NorthStar Equity Investors

NStar is an early stage finance and business support company. Its job is to put tools and services in place that allow businesses in the North East of England to develop and flourish.

To fill the void of early-stage investment for high-growth technology businesses, NStar has created two funds, which are managed by its subsidiary, NorthStar Equity Investors (NSEI). With a total of £33million to invest, this venture capital company is giving entrepreneurs and SMEs access to the capital they need to realise their potential.

The £10 million Proof of Concept Fund (POC) is designed to help innovative science and technology businesses develop and market their ideas at a very early stage. Investments from the POC Fund range from £10,000 to £90,000. The POC Fund was set up with money from regional development agency One NorthEast and the European Regional Development Fund (ERDF).

The £23 million Co-Investment Fund (COIF) is designed to help fast-growing companies secure investments of between £100,000 and £1 million. The COIF is funded solely by the ERDF.

NSEI’s fund managers have strong industry and technology backgrounds and practical experience of growing technology businesses. NSEI is authorised by the Financial Services Authority.

NStar is now also running a programme called Finance and Business, which provides financial instruction for SMEs from all sectors in the region. This provides a range of innovative financial support services including training, coaching, mentoring and advice. One-day Finance and Business courses are running throughout the year, free of charge – and are suitable for anyone who feels their business is ready for growth.

For more information – visit the NStar group websites: