The Wales Business Fund will support SMEs through loans and equity investments from £50,000 up to £2m. It will makes investments up to 2022.

Backed with £106m from the Welsh Government and the European Regional Development Fund, the new fund is the successor to the now fully invested £150m Jeremie Fund, managed by Finance Wales. Legacy funding from Jeremie will also be invested into the fund.

The Jermie Fund was part funded by the European Investment Bank (EIB)with an interest bearing £75m loan. In theory the new fund, without any repayment element, should mean it offers lower interest rates on debt to SMEs.

The fund holder will be Finance Wales, which is wholly-owned by the Welsh Government. The management of the fund will go out to tender. Finance Wales will bid to run the fund.

The fund’s equity element will be in region of just under £50m.

An issue with the Jeremie Fund was that the UK Government classified the £75m of repayable finance from the EIB as part of, and not additional to, the Welsh Government’s block grant.

As a result a total of £97m had to be accounted for from its reserves and appeared on the balance sheet of the department for the Economy and Transport.

By not having an external funders it will mean that the new fund will not put any constraints on the Welsh Government finances.

The First Minister Carwyn Jones said: “Small and medium sized enterprises are the backbone of our economy and play a vital role in creating jobs, increasing productivity and driving growth across Wales.

“As a pro-business Government, we are committed to supporting both start-up and existing businesses to grow and flourish and I am delighted that we are investing EU and Welsh Government funds to back this goal.”

A key focus of the new fund will be for the fund manager [s] to work with banks and other private sector investors to leverage in private co-investment on a deal-by-deal basis.

Gareth Bullock, chairman of Finance Wales said: “The Wales Business Fund is an important new EU and Welsh Government-backed fund which will have a significant impact on Wales and the Welsh economy for many years to come. It cements the Welsh Government’s long-term commitment to Welsh SMEs and will build on the achievements of the Wales JEREMIE Fund.

The Wales Business Fund will complement the other funds currently available from Finance Wales and provide Welsh SMEs with a comprehensive range of growth funding options.”