UK Steel Enterprise has called for more Gwent companies with growth potential to take advantage of equity funding.

As one of UK’s longest-established business support organisations, Tata subsidiary UKSE says equity finance can be a winner for businesses of all sizes, and that its own research shows that equity-backed businesses grow faster than those backed solely by loan funding.

In Wales in the last 39 years, UK Steel Enterprise has supported 1,383 companies with £23.2m, meaning that the organisation has played a role in the creation of nearly 25,000 jobs. Many of these have been in the Gwent area.

In Britain in that time, UKSE has supported more than 6,000 companies with tailored financial packages, making £80m of true risk capital available and creating around 75,000 jobs. It has also invested more than £33m into providing business premises and helped community projects in its steel areas with £8m.

The recent CBI report Slice of the Pie highlights the UK’s over-reliance on traditional debt finance, saying that greater use of equity finance could help more firms to invest, grow and boost the UK economy.

Andy Morris, UK Steel Enterprise area manager for Wales, said: “The report highlights that although only three per cent of growing firms use equity finance, two thirds of those who do use it report a positive experience.

“We echo that as we have found that equity finance can work really well for SMEs as well as larger companies. As a regeneration body, we aim to help businesses looking for relatively small amounts of investment and can provide share packages up to £750,000.

“One of the key advantages in taking equity funding is that all the cash stays in the business rather than having to be used for loan repayments. Other benefits for SMEs include a strengthened balance sheet and the possibility of further expansion finance from a source with a real vested interest in the business.

“We also agree that it is a myth that using equity finance results in a loss of control. UKSE is not here to run businesses and we never take a controlling interest but we are a source of support and advice that our companies say is a real benefit,” he said.