£1.4 million Loan Fund in LeedsJuly 19 2007
Leeds Credit union and Business Enterprise Fund work together to provide a £1.4 million loan fund
£1.4 million loan fund lends Leeds entrepreneurs
a helping hand
A £1.4 million loan fund has been created to help entrepreneurs in some of the most disadvantaged areas of Leeds set up and grow their own businesses. The fund will competitive business loans for individuals and businesses unable to access finance through traditional sources such as banks and building societies.
It has been created by the Leeds LEGI (Local Enterprise Growth Initiative) programme in partnership with the Business Enterprise Fund and Leeds City Credit Union, to encourage enterprise in some of the city’s poorest communities.
Recent research suggests that residents in areas such as Harehills, Beeston, Chapeltown and Gipton face difficulty obtaining loans from the usual high street lenders. As a result many turn to doorstep lenders who charge much higher interest rates, and this could be costing the local economy as much as £9.5 million per year.
Working with Leeds City Credit Union, £1 million of the total loan fund has been allocated to provide help exclusively for start up businesses in disadvantaged areas of the city. The fund will offer loans of up to £5,000 to help entrepreneurs get the first step on the business ladder.
Leeds City Council’s ‘Exclusion to Inclusion’ report interviewed residents from some of the poorest areas in the city and found that 20% of people interviewed would be interested in taking out a business loan but can’t access the high street lenders due to poor credit histories, bankruptcy, or high levels of existing debt.
Over the next three years the credit union is expecting to give over 200 of the new loans to would-be entrepreneurs at a comparatively low interest rate. The loans target people who might normally pay interest rates as high as 300% APR due to poor credit ratings.
Sue Davenport, chief executive of Leeds City Credit Union commented:
“There are many talented people living in these communities who have a real business idea but in the current market have no way of realising their goal. The new loans that we are offering will allow them to break down the first of many barriers to starting their own business.”
The Business Enterprise Fund will also be offering competitive loans in association with the Leeds LEGI programme. The Business Enterprise Fund targets start up and expanding businesses, which are unable to access finance through high street lenders.
With £400,000 dedicated to this project, the Business Enterprise Fund can ensure that all businesses taking out a loan with them will also have access to a business mentor who work with them to develop business management skills. The loans provided by the Business Enterprise Fund start from £5,000.
Stephen Waud, Fund Director at the Business Enterprise Fund commented:
“The scheme is designed to support those businesses who have been unable to secure the funding they need from high street banks. Many businesses fail because they have a fantastic product but poor business management skills and are unable or unaware of how to deal with business issues such as changing markets and increased competition. The mentors help to explain situations and offer practical help in the running of their businesses. This includes book keeping, marketing advice and some legal support”
Both loan schemes are supported financially by the Leeds LEGI programme, but they will be delivered by the Business Enterprise Fund and Leeds City Credit Union.
Leeds has been awarded £15.6 million funding over the next three years to help develop enterprise, create new jobs and boost prosperity in the city’s most disadvantaged communities. By 2010, the programme aims to create over 500 new businesses within areas of greatest disadvantage in Leeds.
Richard Mansell, chair of Leeds LEGI programme board, added:
“The next three years will be an exciting time for Leeds. With the LEGI investment we will be able to make a real and lasting difference to some of the most disadvantaged communities in the city. The projects that we are undertaking are about raising aspirations and providing opportunities that help people to succeed in business through creating a culture of enterprise and entrepreneurship.”
To arrange a consultation with Leeds City Credit Union call 0113 214 5254 and for the Business Enterprise Fund call 01274 207 217.
See the following link http://www.leedsfinancialservices.org.uk/LFSI/news.aspx?NewsID=308&TabID=4&MenuID=1
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