A PLANNED Scottish-Nordic financial institution that aims to help microbusinesses and SMEs secure funding and government contracts has come closer to being launched, after Norway's main enterprise agency gave its backing to the project.
Innovation Norway last week committed Kr100,000 (pounds-8600) to a feasibility study into the new institution, dubbed Hanseatic Microfinance Institution.
The body is expected to operate in Scotland, Norway, Denmark, Sweden, Finland, Estonia, Latvia and Lithuania, and possibly also Iceland, Greenland and the Faroe Islands, all part of the Hanseatic League in the Middle Ages.
"In Scotland and most Hanseatic countries, most businesses fall into the microbusiness category, " said Anne-Grethe Eckman of Edinburgh-based Nordic Enterprise Trust, which is behind the project. Microbusinesses employ fewer than 10 people.
"Yet the public sector is failing to engage with this sector when it comes to procurement. There is also a serious funding gap, both the difficulty of obtaining 'micro' credit from banks and the total absence of any 'microinvestment mechanism', " she said.
Project manager Chris Cook, an independent consultant and former director of the International Petroleum Exchange, said the body would be "a linked network of local investment institutions", replicating aspects of the UK government's Small Firms' Loan Guarantee scheme (SFGS). But Cook added it would "go a further leap beyond the SFGS".
The proposal is part of a wider initiative to improve the policy framework, as well as boost the commercial prospects, of firms with less than 10 employees across Northern Europe.
"We're aiming to address the needs of microbusinesses and SMEs using two important tools, " said Eckmann. Using the first, firms will be linked either because they are based in the same area or in the same sector.
Eckmann said: "The second tool is the capital partnership. This allows the provider of finance and the user of a capital asset, such as a wind turbine, to enter a revenue sharing co-ownership partnership, where return on capital may be made either in cash or in money's worth such as energy."
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