The government’s Growth Capital Fund has raised £200 million to invest in SMEs, half of it from Lloyds, RBS, Santander and Clydesdale Bank.

The government’s Growth Capital Fund has raised £200 million to invest in small and medium-sized enterprises (SMEs), half of it from Lloyds, RBS, Santander and Clydesdale Bank.

The Treasury, which holds large stakes in RBS and Lloyds following their bail-outs, has committed the remaining £100 million to the fund.

Chancellor Alistair Darling said in his Budget speech that this ‘cornerstone investment’ will enable the Growth Capital Fund to raise further private finance, bringing its total size to £500 million.

The fund was launched in response to last year’s Rowlands review, which concluded that there was a ‘new equity gap’ for businesses seeking financing of less than £10 million.

Accordingly, the Growth Capital Fund will provide investments of between £2 million and £10 million to SMEs in the UK.