The Regional Growth Fund has opened its doors for the fourth time and set aside £350 million for bids.

Deputy prime minister Nick Clegg has called for ‘high quality’ submissions from businesses looking to secure more than £1 million.

There has been criticism about how quickly the government has freed up the £2.6 billion fund, which is set to operate throughout England between 2011 and 2016.

Back in November 2011, British Chamber of Commerce chairman John Longworth attacked the speed of delivery and said that, ‘While due diligence has to play an important role, it must not drag on if we’re to see any real, tangible benefits.’

To find out what goes into applying for a slice of the Regional Growth Fund pie, GrowthBusiness spoke with one of the latest recipients, Kent-based manufacturer HV Wooding.

The business started out 45 years ago as a father and son partnership making tools. Over the course of its evolution, the company has pivoted to focus on electrical components. Its website confidently states that 22 million homes in the UK have electrical products incorporating metal pressings made by HV Wooding.

Prior to applying for Regional Growth Fund cash, the company had been entirely self-funded. A profitable streak during the past 5-6 years took turnover from £6.5 million to £13.5 million, and staffing levels from 75 to 115.

The business had previously put together growth plans for its press shop but had, over the years, spent the disposable capital it had set aside for that development in other areas. As a result, the press shop had become a ‘poor relation’ to the rest of the business and in need of an overhaul.

Karl Dodd, head of purchasing at HV Wooding, was alerted to the availability of the Regional Growth Fund by a friend at Location Kent and then set about contacting the Kent Channel Chamber to find out more.

At the time of his first enquiry, the cash pot was still available through a grant scheme, a decision which has since changed to a 0 per cent loan.

‘Initially I spoke to the Kent Channel Chamber who were making noises about the funding, and made contact with the Chamber’s chairman Peter Hobbs,’ Dodd says.

‘He was very helpful and offered us a briefing with one of this business advisors.’

More on the Regional Growth Fund:

• Growth fund investment delivery speed attacked
• Regional Growth Fund – Just a smokescreen for more cuts?
• Please sir, can I have some more

Kent County Council is hoping to boost business and attract inward investment through its Grow for It campaign.

The scheme highlights the £35 million of interest-free loans available via the Regional Growth Fund, access to facilities such as the laboratories at Sandwich’s Discovery Park and three major local universities.

Having looked at the criteria for businesses applying for a share of the Regional Growth Fund, Dodd and HV Wooding decided that the company ‘ticked all the right boxes’.

‘We put a pre-application in and within a couple of weeks they came back to us and said you need to do the full application as you are a prime candidate,’ Dodd explains.

‘The full application was extremely involved, but not necessarily hard. It taxed us, it wasn’t the most difficult process, just incredibly involved.’

With a lot of information and financial details to pull together, Dodd says that the completed document was ‘an inch and a half think’, but properly reflected where the business was in its current guise and where it wanted to grow.

Dodd predicts that putting the full submission together probably took four weeks out of his and financial controller John Osborne’s lives. ‘It was a big bid and needed a lot of our info,’ he reveals.

Despite having to dedicate a lot of man hours to the submission, which the company hoped would secure it £1.1 million, Dodd says that the effort has born fruit in other areas of the company. ‘There was a lot of information there which has been utilised since for the business, which we are now keeping updated,’ he says.

Having sent of the full bid, HV Wooding and Dodd then had rounds of questions back from the auditors. A combination of old data on Companies House regarding directors’ interests, and being accused of having a company out in the Netherlands that no one was aware of, all proved to be false.

Prior to being awarded the £1.1 million interest free loan, HV Wooding had to go up and see Kent County Council in Maidstone to present a final case to the board.

Dodd adds, ‘They wanted to meet us and understand the personalities at the company and look at the passion.’

Previous rounds of the Regional Growth Fund:

• First recipients of RGF named
• Second round Regional Growth Fund companies
• Third round of RGF sees a further £1 billion allocated

In full, the process began at the beginning of 2012, with a full application started during May and submitted in August. The green light for success was pressed in October and the business now has a payment plan in place to determine when the cash comes through.

‘Every quarter we have to submit monetary documents to show things like payroll, where spending is going and invoices for plant and machinery which we are procuring,’ Dodd explains.

‘The cash dribbles through. We sent down a payment plan, which was a quite heavy thing to do.’

With every other county in the country distributing the cash via grants, Dodd admits that it would have been great for HV Wooding to have secured its cash that way. However, he doesn’t think that it is necessarily a bad idea as the money can be recycled.

‘The fact that we are going to pay back a certain amount and our re-payment starts this year, the logic behind it is that it will last a lot longer [in this county].’

GrowthBusiness contacted Expansion Kent East, the body distributing its share of the Regional Growth Fund capital, to find out why it had decided on an interest-free loan structure. It replied with this statement: ‘Expansion East Kent distributes the Regional Growth Fund as 0 per cent loans so that the money recycles and can benefit more firms in the long run. It’s about helping create sustainable growth, and is a policy that was strongly supported by the private sector advisers on the Expansion East Kent Investment Advisory Board.’

Looking back on the process, Dodd believes that he can ‘honestly’ say that he and the business were well supported throughout. ‘It is there to have, you just need to get off of your backside and go find where it is,’ Dodd encourages.

Whatever the government can do to encourage SMEs to invest, at a time when many are holding onto cash, is a good thing, Dodd says.

Looking forward, the £1.1 million HV Wooding has secured is part of a £3 million spending package the business is set to embark upon over the coming 2-3 years. Further capital will come from the company’s pension fund and other cash resources.

Despite already having a healthy relationship with the bank, HV Wooding has managed to secure a highly flexible interest free loan of £1.1 million from the Regional Growth Fund, solidifying its growth plans and allowing it to modernise the future of the company.